Canadian shoppers just keep coming

North Dakota State Roundup

Published April 1, 1992  | April 1992 issue

While the Canadian government devises new incentives to keep Canadian shoppers at home, North Dakota border communities continue to reap the benefits of cross-border buying trips.

In a study released in February, University of North Dakota geography professor Lowell Goodman estimates that the 7,200 Canadians who shop weekly in Grand Forks spent $113.5 million in 1991.

The 1991 repeal of Sunday shopping restrictions in North Dakota has also contributed to heavy retail traffic. Since early 1991, each Canadian shopping entity—family or individual—spent an additional $58 per shopping trip because of Sunday openings. And Sunday store openings are the chief reason why Grand Forks hotels/motels have the highest occupancy rate in the nation. Weekend accommodations are booked solid in a 30-mile radius of Grand Forks, according to Goodman.

With about $2 billion to $4 billion in sales lost to the United States annually, the Canadian government is looking for ways to stem the flow of shoppers.

By eliminating tariffs on some retail items, such as VCRs, cameras and microwaves, the Canadian government hopes to decrease the price difference between US and Canadian markets, thereby keeping Canadian dollars at home. But, according to Goodman, it is likely that many Canadians would still make that US shopping trip for high-ticket items. "The thinking is if something costs $150 or more, it's still worth it to come down here because they can buy so much else at the same time."

Another national plan, termed "harmonizing," calls for provinces to tax all the same items as the Canadian federal government does through its 7 percent goods and services tax, thereby nearly doubling the sales tax on many items purchased in Canada and brought in from the United States. The benefit suggested to the provinces is additional tax money from both the Canadian side and from US purchases. All made easier because federal officials would collect both the provincial and the federal taxes at the border.

However, the prairie provinces are reluctant to participate in the harmonizing scheme. Manitoba has already said no because it would mean broader taxes in the province, placing an extra burden on Canadians buying in Canada.

Mulling over the likely outcome of the Canadian government's tactics, Goodman says, "At some point they will succeed; it's only a question of whether they will use politics or economics."

Kathy Cobb