RCC Press Release: Retail Council applauds government’s plan to tackle Canada U.S. price differences and credit card costs
“Having been the leading association in calling for these costs to be reduced, RCC is heartened to see the government’s specific language committing to help lower credit card acceptance costs. This is a $5 billion+ issue for Canadian retailers and consumers and one that has been particular debilitating for our independent merchants. Today’s budget is clear evidence that the government is moving in the right direction. – Diane J. Brisebois, President & CEO, Retail Council of Canada”
While most RCC members will already have seen media and expert coverage of the broad themes in the 2014 Federal Budget, there were two announcements of particular interest to retail merchants.
Budget 2014, which was released yesterday, contained a number of provisions related to food and food safety, most of which appear to be the continuation of existing commitments. It committed to invest an additional $390 million over five years to strengthen Canada’s food safety system. This amount is comparable if slightly higher to investments made under the Conservative Government since 2006.
Highlights for retailers
Legislating Against Unjustified Cross-Border Price Discrimination (p. 180)
Economic Action Plan 2014 announces a plan to introduce legislation to prohibit unjustified cross-border price discrimination
It is well documented that Canadians pay more than Americans for many identical goods. Estimates from Statistics Canada suggest that Canadians were paying about 25 per cent more than U.S. consumers for goods in 2011 after adjusting for the exchange rate and sales taxes, slightly up from 24 per cent in 2008. Estimates for more recent years by private sector organizations suggest that price differences remain high. Canadians work hard and should not be gouged with higher prices simply because of where they live.
Canadian retailers pay some of the highest merchant processing rates in the world. RCC continues to advocate for lower fees on behalf of retailers.
Promoting Fairness and Transparency in the Credit Card Market (p. 186)
The Government will improve fairness and transparency in the credit card market.
Merchants pay fees each time they accept credit card payments from consumers. As with any other input cost, merchants pass some or all of these costs to consumers in the form of higher retail prices. Canada has among the highest credit card acceptance costs in the world.
David Wilkes, Senior VP, GR and Grocery Division, speaks out for retailers at federal budget unveiling in Ottawa.
Strengthening Canada’s Food Safety System (p.183)
Economic Action Plan 2014 proposes to provide $153.6 million over five years to strengthen the Canadian Food Inspection Agency’s food safety programs.
Country Pricing (p. 183)
Movements in the Canada-U.S. retail price gap are mostly driven by changes in what retailers pay at the wholesale level, rather than changes in retailers’ profits.
These findings are consistent with the Retail Council of Canada’s submission to and testimony before the Senate Committee explaining survey findings that “for retailers who have stores in both Canada and the United States, they are charged anywhere between 10 per cent and 50 per cent more for identical products by some suppliers” and that “country pricing is one of the largest contributors to the difference in pricing [between Canada and the U.S.]”
In the media
Post-Budget Breakfast 2014 with Minister Jim Flaherty
Share your reactions online @retailcouncil.
Please contact us here for media inquiries regarding the Federal Budget announcement.