The following is excerpted from the 9 April 2013 article by CBC News.
Canadian consumers could soon face higher prices on electronics like TVs and iPods because it's going to be all but impossible for importers to exempt the products from a controversial tariff, a major electronics maker warns.
Importers are being asked to jump through too many hoops in order to qualify for a special exemption from the tariff on the popular products, said Mark Trylinski, logistics director at Sony of Canada.
Trylinski — who predicted a price spike of about five per cent — said companies may eventually decide the customs duties that are imposed on some items mean it no longer makes financial sense to import them.
The Canada Border Services Agency has ruled that importers who use the special tariff classification must get certificates from the end users — consumers, in most cases — that certify the product will be used with a computer.
The Customs Act states that the verification certificates should be signed and show "the user's name, address and occupation and indicate the actual use made of the commercial goods."
The exemption has also been interpreted to apply only to devices in "continuous use" with computers, which means iPods and other MP3 players are unlikely to qualify.
"What that would mean is that if you go into, for example, Future Shop or Best Buy, and you were to purchase an MP3 player, you would in essence have to provide your private information and sign a certificate that states that you would be using this product in accordance with the code," Trylinski said in an interview.
"As a consumer, CBSA would have the right to come into your home and validate your use of this particular piece of equipment."
But that's not all, Trylinski said: the exemption rules also require that importers retain the certificates and verify over time that the device is still being used in accordance with the rules.
"I would have to get it from the actual store itself, maintain it, and in addition to that, verify that you are continuing to use it and have not diverted it in any way over a period of time."
The border agency wrote to Trylinski last November indicating Sony would be required to pay what amounts to back taxes on previously imported televisions.
The letter also makes it clear the requirement would not only apply to televisions, "but also any other goods that have been accounted under [the tariff] and for which no certificate or other record signed by the user of the commercial goods are available."
In other words, anything imported under the special tariff classification provision without an end-user certificate.
The federal government points to the exemption as proof there's no such thing as an "iPod tax," but Trylinski said it simply isn't going to be practical for importers to apply for it, given the requirements.
Since most importers are unlikely to comply with those requirements, customers will likely end up paying more, Trylinski said…"And it will probably reduce the assortment of goods that they have available to them."…
This article is available in its entirety at: http://www.cbc.ca/news/business/story/2013/04/09/business-ipod-tax-sony-tariff.html.