Cut prices to reflect strong dollar, Flaherty says
16:01 EST Friday, Aug 03, 2007
OTTAWA Finance Minister Jim Flaherty says he is frustrated that Canadians are paying too much for imported goods and has told business leaders the government expects them to pass along savings from the higher Canadian dollar.
If consumers don't see benefits soon, he said, they should exert pressure by shopping around for the lowest prices.
In a wide-ranging interview from Coolum, Australia, where Mr. Flaherty was wrapping up two days of meetings with his counterparts from the 21 Asia-Pacific countries, he was upbeat about the economy and the prospects for bigger tax cuts in his next budget.
But he appeared displeased that the surging loonie has had little impact on prices Canadians pay on everything from food and books to cars.
I won't name the companies ( but initials are G.M. ) , but have spoken to some business leaders about ensuring that they pass along savings ... price reductions that should follow the higher Canadian dollar, he said.
Mr. Flaherty said the business response has been that there are inventories of goods purchased when the dollar was weaker, and that corporate planning periods are longer than a few months.
So my point to the business leaders has been, You should do what you can to accelerate the benefit to Canadian consumers,' and I think, quite frankly, that Canadian consumers can help by shopping around.
One reason for his concern, Mr. Flaherty said, is that Canadians might start shopping in the United States, where savings can reach 40 per cent. This would hurt the economy as is the failure of the robust dollar to dampen inflation.
It's an important issue for the economy, said Douglas Porter, deputy chief economist for the Bank of Montreal.
The Bank of Canada is disappointed about how strong underlying inflation has been in Canada at a time when the currency is on fire.
Mr. Porter published a report in June showing that while the loonie has appreciated by 50 per cent over the past five years, import prices have not dropped accordingly.
The BMO report found magazines are between 10 and 23 per cent more costly in Canada than they should be. Other overpriced goods included foreign automobiles, cameras and books.
Mr. Flaherty conceded he cannot order price reductions, but added, We have some influence. He did not elaborate.
The Asia-Pacific Economic Co-operation meeting concluded with a brief statement highlighting concern over global economic imbalances.
However, despite currency imbalances, the build-up of reserves in China and the credit crunch stemming from the sub-prime mortgage meltdown in the U.S., the consensus was that problems are manageable, Mr. Flaherty said.
I think there is a risk to the Canadian economy, but we have been saying that for 18 months, he noted.
In fact, the economy has performed better than the government had forecast in the March 19 budget, with strong 3.7 per cent first-quarter growth and the second quarter expected to register a 3 per cent gain.
This robust performance has filled government coffers with tax revenue at a faster pace than even last year, when Ottawa recorded a budget surplus of about $14-billion.
Mr. Flaherty said he wants to remain cautious, but it may be possible to do more on the tax relief front.
I still think that Canadians pay too much tax. We can look at income splitting, we can look at increasing thresholds [at which higher tax rates kick in], or increasing exemptions. These are all possibilities in terms of further tax reductions.
Mr. Flaherty added that it is too early in the fiscal year to assess how much room he will have to reduce taxes.
At a news conference from Charlottetown on Thursday, Prime Minister Stephen Harper sounded more bullish about tax cuts, saying tax relief has been and remains a top priority for the government.
blah blah blah. Nothing we haven't heard before. Especially on the campaign trails. And by talking about it now, it makes them seem like they are doing something about it. And maybe they are. Government sure do like talking to people. We all know that. When they're not kissing babies, they're stealing their lollipops.
But like all things, it will take time. Things will not happen overnite. So if you are planning a junket to the US for goods, GO!.
Location: Mississauga, Ontario I know all the answers it's the questions I don't understand
Price for one motor mount $69 CND at Performance Improvements, $29US at Jegs, nuff said I buy in the states, hope others start doing it to, that is the only way anything is going to change. Maybe Canadians are just too stupid to realize they are getting ripped off
Iam new canadian just 2 months old, and lived in US for 11 yrs, and had 5 cars including an 85 vette that has gone throu 4 transmissions, 1 rear end and 2 engines and whole interior well in 4 yrs of ownership i spent 32000 bucks into it, sold it before i moved here glad i did that, just bought a nissan maxima and had to tune this car bymyself, bought a brake cleaner for 5.99 /tax and over there in US i used to buy 1.29 a cheapo one. NGK spak plug 5 bucks each and same plug in US for 1.69 ..........etc. Sure things are expensive here. Oh in US i used to pay 95 bucks for 93 lexus +85 vette+renters insurance, now with G license a nissan maxima iam paying 145/month, this was the cheapest.
Welcome to Communist Red Canada, But look at all the money you save on Health Care after you get sick of paying through the nose for everything else.
So true there are couple good stuff in canada, health care and retirement and other benefits to childrens, unfortunatly iam a single with no kids so i pay more taxes and being healthy i dont visit hospital much, but i know i would be old within no time. So its like an investment. I also like people here they are cool and more family oriented than other western countries, i like that even though iam single but i always respect family guys. Iam still learning here.
this thread is getting a bit off topic --
fact - most companies do not have 'mechanism' to monthly adjust prices for items that are based upon US Dollar
Fact - most companies will have to have a HUGE devaluation on inventory to bring prices back into line with currency exchange rate
BUT - if companies do not --them 'CROSS BORDER shopping' will put a REAL HURT on Cdn stores.
Point is -- many prices should be lower in Canada - and unless we mention this and complain - then little happens.
We can be heard - but it may take time to chip thru the barriers.
Do you part -send an e-mail to the CEO of some company - and tell them you are NOT happy with the price when compared to their SAME stores in the USA.
Corvette Store
Government says -- CUT PRICES ---
So true there are couple good stuff in canada, health care and retirement and other benefits to childrens, unfortunatly iam a single with no kids so i pay more taxes and being healthy i dont visit hospital much, but i know i would be old within no time. So its like an investment. I also like people here they are cool and more family oriented than other western countries, i like that even though iam single but i always respect family guys. Iam still learning here.
