Canadian duty free is undergoing a “slow and painful recovery,” as it still struggles to rebound from the COVID-19 pandemic, facing underwhelming car traffic and domestic taxes targeting its industry, Frontier Duty Free Association (FDFA) President Tania Lee said in her opening remarks at the Operators Meeting of the landmark 40th anniversary for the Canadian land border duty association.
Lee called the celebration of 40 years a “milestone that not only speaks to our resilience, but also to our determination and our perseverance.”
FDFA President Tania Lee gives her opening remarks at the Operators Meeting at the 2024 Convention in Toronto.
And Lee acknowledged that the Canadian duty free industry is still struggling to reach those pre-pandemic numbers.
“Looking around we know that there are a number of stores that are not with us today and are unable to join us. These are still challenging times for our industry. The impact of COVID continues to weigh heavily upon us, with many stores still operating below 2019 levels. The car traffic has not come back, is not fully rebounding. Traffic patterns have been disrupted and I believe we are all seeing disappointing sales levels,” said Lee.
“We face higher costs and lower sales, which is not a good combination in the face of inflation.”
Yet the Canadian land border operators have faced adversity before, and come through stronger each times, said Lee.
“This year marks our 40th anniversary of us an industry, a milestone that not only speaks to our resilience, but also to our determination and our perseverance. Not many industries have reached 40 years.
“Our history is full of challenges, from the struggles we first had to secure our suppliers, passport requirements that we faced, the imposition of excise taxes. Each time we saw this we banded together, we fought for our survival, and we achieved remarkable success.”
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Domestic excise tax in duty free
For the first time in its 40 year history, a domestic tax has been applied to the Canadian duty free industry, which Lee calls a “slippery slope” that could lead to duty free being targeted with more taxes going forward.
“We have had an export tax put in our industry. This drains our sales, this drains the government revenue. It is being used as a precedent to put other taxes on our industry,” said Lee.
“An excise tax that is tied to inflation each and every year is not good for our industry. This is our top priority. We have had the misapplication of domestic federal excise tax put onto us for the first time. This is a big slippery slope. This cannot be used as a precedent to put taxes on our industry. This is our top priority.”
The FDFA is working to get this excise tax removed, says Lee.
“As always as a pillar we work to protect our industry and our licenses. We have been putting in the time to attack these issues from every single angle. We have been to numerous meetings throughout the year to get our messages heard. We will attend any event they will give us and we will take the time to meet with ministries, bureaucracy, politicians. Change In policy takes time and effort.”
And Lee says awareness of the Canadian duty free industry in Ottawa is at its highest that it has ever been.
“What is our intent? We need for government to understand what duty free is. This is a revenue positive story for the government. We are export. This is the crux of who we are, the basis of our business. Any threat to this undermines the foundation of our businesses. Any misapplication of policy does only one thing: it transfers sales out of Canada and to the USA, or to illicit trade in the case of tobacco,” said Lee.
“We know that we are going to put in the work to get key legislation removed from our industry. We will continue to build the blocks to get us to where we need to go. We are working to ensure that better days are ahead for us.”
