Opinion: Cross-border shopping deals remain elusive

WATERTOWN, N.Y. – For anyone planning to do some cross-border shopping for the holidays, here’s a tip: Do your homework first!

By that I mean check carefully how much you would pay at home for the items you are thinking  of buying in the United States.

Many Ottawans swear they save a pile of money by hopping across the border to shop in the United States. I doubt they would be so sure of themselves if they checked carefully at home first, especially if they shopped around for bargains in Ottawa. Any smart shopper knows how much prices can vary between one Ottawa store and another.

The arrival in Ottawa of Target, a trendy U.S. department store chain known for its good selection and competitive prices, seemed like a good time to do a reality check on the benefits, if any, of cross-border shopping.

I was mildly surprised to find that several items on my shopping list didn’t cost much more in Ottawa than you would pay across the border. In a few cases, items were actually priced lower at a Target store in Ottawa than at a Target in Watertown.

Factor in the higher value of the U.S. dollar, as well as bridge tolls and the cost of gas for the four-hour round trip between Ottawa and Watertown, and it hardly seemed worth the journey.

I drew up my shopping list by pricing items at the new Target in Hazeldean Mall in Kanata, and then comparing them with those at the Target store in Watertown, which is the closest large U.S. shopping centre to Ottawa. I compared prices only of identical items or items with no apparent difference in quality or performance.

In the accompanying chart, Target’s Ottawa prices are in Canadian dollars and Target’s Watertown prices are in U.S. dollars. All prices are before sales tax. In Ottawa, we pay a whopping 13 per cent in sales tax on most things we buy. In Watertown and elsewhere in northern New York, the sales tax is a mere 7.5 per cent. Advantage, cross-border shoppers. But only if they don’t have to pay Ontario and federal sales tax at the border on their return to Canada.

The biggest disadvantages of cross-border shopping are Canada’s import rules and the costs of travelling to and from the United States.

Day-trippers to the United States are entitled to no exemption from tax or duties on their return to Canada. This means they are subject to a 13-per-cent sales tax at the border if they are returning from a day trip with items that are taxable in Canada.

The situation is better for those returning from a visit to the United States of more than 24 hours. They are each entitled to bring in up to $200 of merchandise purchased outside the country, tax-free. But the Canadian government stipulates that if the value of goods purchased exceeds $200, the shopper has to pay duty and taxes on the entire amount. (If you’re away for 48 hours or more, one’s exemption rises to $800.)

There is a third disadvantage of cross-border shopping. Canadians have recently been paying about $1.05 to buy a U.S. dollar. That is more than the official exchange rate because traders make their money by charging a higher rate to sell a foreign currency than they charge to buy that currency. It means Canadians have recently been paying about an additional five per cent on the price in U.S. dollars of all they buy.

Target stores in Canada and the U.S. both offer a five-per-cent discount to shoppers who use a Target credit card, so there’s no difference there.

All in all, there are some bargains to be found by crossing the border but smart shoppers would do well to do their research before heading south.

Editor's note: This is a corrected story. An earlier version of this article said sales tax in Watertown is four per cent. In fact the sales tax there is 7.75 per cent. The state charges four per cent sales tax, while Jefferson County (where Watertown is located) charges another 3.75 per cent sales tax.

Sidebar: Comparing cross-border prices


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