05/01/2012 08:15 EDT | Updated 07/01/2012 05:12 EDT

Cross-Border Shopping Change Irks Businesses


The federal government’s decision to allow Canadians to shop more in the United States without paying duty is going to hurt New Brunswick businesses, according to two business groups.

Finance Minister Jim Flaherty announced in his latest budget that Canadians could now bring back up to $800 worth of goods duty free, up from $400, when they travel to the United States for longer than 48 hours.

Canadians who travel to the United States for 24 to 48 hours will be able to return with $200 of tax-exempt goods up from $50. The changes are scheduled to come into effect on June 1.

Both the Greater Moncton Chamber of Commerce and Downtown Fredericton Inc. say they weren't consulted about the federal changes and they worry about the effects that decision will have on local companies.

Nancy Whipp, the chief executive officer of the Greater Moncton Chamber of Commerce, said the policy change will have a very simple effect. She said that allowing people to bring back more tax-exempt goods from the United States will mean fewer shoppers in Moncton.

“Prime Minister [Stephen] Harper is encouraging people to actually go shop in the United States, drop their dollars in the United States, not leave tax dollars or dollars here — not create jobs here,” she said.

Whipp said retail sales are worth more than $2 billion a year in Moncton. And when money is spent locally, she said that generates revenue to pay for roads, education and health services.

Bruce McCormack, the general manager of Downtown Fredericton, said he’s already fielded calls from business owners who are upset by the change and how it will hurt their finances.

“This is a pretty big deal and we will be talking to our MP. I just think it's a shame that nobody was consulted,” he said.

Both Whipp and McCormack say business groups are getting organized to make sure the federal government knows they're angry.

While the officials say they doubt the federal government will change the rule, Whipp said they want to explain their concerns with the decision to allow Canadians to bring more tax-free products across the border.

“It's kind of counterintuitive. It's just very difficult to understand and what's the logic behind it,” she said.