Importers accuse Ottawa of deceptive tariff breaks
Electronics firms now owe $16M in retroactive duties
OTTAWA — Importers of popular electronics such as big-screen TVs and MP3 players are ramping up their fight against federal tariff changes, accusing the government of misleading them by offering tariff breaks that it planned to claw back later.
Importers of televisions owe about $16 million in retroactive duties from 2011 after last year’s crackdown on a particular tariff exemption that has become a political football.
Electronics brought to Canada under exemption 9948 are supposed to be used continuously for four years while hooked up to a computer, and importers are required to provide an “end-user certificate” proving that’s how each device was used.
No such end-user certificates for consumer electronics exist, something officials at the Canada Border Services Agency have acknowledged in internal emails. Now a coalition of importers says it has documents that prove border officials allowed them to import products duty-free, knowing the government would claim the tariffs and penalty costs at a later date.
For a Conservative government that once made political hay out of accusing the New Democrats of planning an iPod tax, the new levies on electronic goods could prove embarrassing.
Finance Minister Jim Flaherty insisted this spring that iPods would continue to enjoy tariff exemptions under 9948. However, specific CBSA rulings have already determined that iPods require the same non-existent end-use certificate. Flaherty appeared to take a tougher line Wednesday at a Commons committee hearing.
“You’re talking about a process problem,” he told Liberal MP Scott Brison, who asked directly if iPod importers required the certificates.
“Substantively, there is no tax on iPods. And end-user certificates have been required for a long, long time over a large range of products,” said Flaherty.
“Some vendors have obeyed the law and some haven’t. And some who haven’t obeyed the law have found themselves in some difficulty. That’s what happens.”
Ken Buschlen, vice-president of finance for Panasonic Canada, says his company and others rely on the CBSA to act in good faith with its advance tariff rulings. “CBSA issued us authorization to import products dutyfree, but it now appears the CBSA intended to claw back the duties later. This is clearly unfair,” he says in a news release.
The coalition bases its claims on hundreds of pages of government emails it received under the Access to Information Act.
The emails show that as early as 2008, CBSA officials recognized importers using the 9948 exemption would not be able to provide end-user certificates, but continued providing advance rulings allowing the goods to enter Canada duty-free.