TORONTO, March 28, 2023 /CNW/ - Today's Federal Budget contains a number of initiatives to address affordability challenges facing Canadian families, but we feel the government missed the mark by not including two key proposals from Retail Council of Canada (RCC) that could have made life more affordable for Canadian families by saving them up to $1000 per year on average.
Specifically, slashing interchange rates for credit card acceptance could have saved Canadian families up to $600 yearly and the elimination or suspension of customs duties could have saved Canadian families a further $400 a year. Together, these unjustifiable charges cost Canadians a whopping $16 Billion annually.
Canadians pay among the highest "swipe fees" in the world. It's a reverse-Robin Hood problem – consumers with modest incomes subsidize prices for wealthier consumers who use premium and super premium cards. As well, growth in credit card sales have vastly outstripped (almost doubled) the growth in sales of the underlying goods at retail. Since credit is vastly more expensive for businesses to accept than debit or cash, the interchange growth on credit card sales has an inflationary impact. If the government cared about the inflationary and regressive $10 billion annual costs faced by Canadian consumers, it would have lowered interchange rates across the board in today's Budget so that people see the savings wherever they choose to shop.
Similarly, many people don't realize that Canadians pay up to 20% more for clothing, shoes, and baby items such as car seats, strollers, and diapers. Overall, these hidden taxes on consumer goods place a $6 Billion burden on Canadian families or $400 for each household. These tariffs were implemented long ago to protect textile and clothing manufacturers in Canada who have long since moved most production to overseas jurisdictions.
Another item that we are disappointed to not see adopted is the creation of a Visitor Rebate which would have given tourists a tax rebate on goods they buy while in Canada – a huge opportunity for the Canadian economy. Similar programs in Japan and the Bahamas have seen growth in tourist spending of over 23% and 19%.
Finally, with regards to today's rebranding of the GST rebate system to help Canadians with the rising cost of food, we would point out that most groceries aren't subject to sales tax to begin with. That said, we agree that delivering regular payments to Canadians on an income-tested basis is helpful during these challenging times.
About Retail Council of Canada
Retail is Canada's largest private-sector employer with over 2 million Canadians working in our industry. The sector annually generates over $85 billion in wages and employee benefits. Core retail sales (excluding vehicles and gasoline) were over $462B in 2022. Retail Council of Canada (RCC) members represent more than two-thirds of core retail sales in the country. RCC is a not-for-profit industry-funded association that represents small, medium, and large retail businesses in every community across the country. As the Voice of Retail™ in Canada, we proudly represent more than 54,000 storefronts in all retail formats, including department, grocery, specialty, discount, independent retailers, online merchants and quick service restaurants.
SOURCE Retail Council of Canada
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