Christopher Bjorke, Forum Communications Co., Published May 27 2012
Canada relaxes returning citizens’ purchase limitsOn June 1, Canadians will be able spend more money on U.S. shopping excursions without having to pay duties on their purchase when they return home, but Grand Forks area merchants are the ones hoping to gain from the break.
“That will absolutely have a huge impact,” said Julie Rygg, executive director of the Greater Grand Forks Convention and Visitors Bureau.
Rygg said her organization has already used the change in its marketing efforts aimed at Canadian shoppers.
The new rules allow Canadian travelers spending 24 to 48 hours in the United States to bring back $200 worth of goods before they pay any taxes on their purchases. Those staying longer than 48 hours can bring back $800 worth of goods tax-free.
Under the old rules, the limit was $50 for a 24-to-48-hour visit, $400 for a visit of 48 hours to a week and $750 for a trip longer than a week.
The amount travelers pay on imported goods varies by the type of the item.
“It’s definitely a positive. Any time Canadians can spend more it’s good for us,” said Scott Volk, a manager at Cabela’s in East Grand Forks.
Incentive to spend
Randy and Samantha Miller of Winnipeg were in the parking lot near Famous Footwear on 32nd Avenue South, sorting coupons and planning their shopping itinerary that included Gordmans, Wal-Mart and Target.
They said the higher limits on import duties will probably mean they will spend more on their shopping trips. The couple makes five or six trips a year, but often keeps track of their purchases to avoid going over the duty-free limit, “especially for bigger purchases.”
“We’ll be doubled,” said Randy Miller. “We might stay an extra day or two.”
Rick Warkentin of Gimli, Man., said he appreciated the tax break, but it would not make much difference in his spending. He spends about $1,500 to $2,000 per visit, usually on home improvement goods, and makes about two shopping trips to North Dakota a year.
Even though he spends well above the duty-free limits, he said it would probably be an incentive to other Canadian shoppers.
“By raising the limit, it will probably attract more people,” he said.
Even without the higher duty-free limits, the lower prices available in U.S. stores are enough to justify the trip.
“More and more, people don’t worry about the limit,” said Warkentin, who was sitting in his pickup Saturday while his wife shopped at Old Navy.
Flood of shoppers
The new rules come as Canadian visits to the United States are on the rise. According to a report by the Bank of Montreal’s BMO Capital Markets titled “Cross-Border Shopping: Here Comes the Flood,” Canadians make more than 50 million trips a year to the U.S.
That report estimated cross-border spending could account for 8-10 percent of Canadian spending on goods that can be taken over the border, a loss of around
$20 billion a year from Canadian retailers, who have protested the new duty rules.
Canadian spending is already a big part of the Grand Forks area’s retail market, and the new rules could be more of a lure for their spending.
According to a survey by the Convention and Visitors Bureau, shopping is the biggest reason Canadians visit Grand Forks. Seventy percent of the visitors surveyed said they came for two-night stays. Most respondents said they usually spent between $250 and $500, including food and lodging expenses, but 25 percent said they usually spend from $500 to $750.
That could increase if shoppers do not worry about reaching their duty-free limit, Rygg said.
“They’re tracking what they’re spending when they’re here,” she said. “Possibly they could come more often and bring more back.”
Chris Bjorke writes for the Grand Forks Herald