Jesse Helmer (Ward 4 councillor in London, dodgeball superstar, hepcat) sent me this photo (with permission to re-post) he took at K-Laba Hair and Beauty Supplies, one of the businesses in his ward.
I looked up “wigs” in the Customs Tariff, and sure enough the good people at K-Laba were right. The MFN tariff on wigs and similar items is 15.5% (not 15%), while the GPT tariff is 0% (noted here as “Free”). Canadians who import wigs from China, India or any of the other countries that had their GPT status taken away from the federal government in Budget 2013 now must be a sizable tax where no tax was charged before.
The KRT entry on the above table refers to Canada’s trade deal with South Korea. In that deal Canada’s tariff on Korean-made wigs is being phased out over three years. The tariff here on Korean wigs is “only” 10%, since the first of the three reductions took place on January 1, 2015. With the high potential for risk with tariff-less Korean wigs, we wouldn’t want to act too hastily getting that tariff to zero.
Companies like K-Laba can still bring in wigs tariff-free under many of Canada’s trade deals. IF those wigs meet the cumbersome country-of-origin rules in those agreements and IF the importer fills out the paperwork correctly and IF they obtain the necessary paperwork from the exporter and IF they retain that paperwork for up to seven years and IF an auditor is satisfied that all the steps have been correctly followed and IF the company doesn’t just decide it is cheaper and easier to just pay the tax and not jump through a million and one hoops, which is a common decision made by small businesses.
The whole system is completely absurd. Why does Canada need a 15.5% tariff on wigs in the first place? What is the public policy problem it is correcting? We can eliminate these tariffs which would remove distortions from our economy, reduce regulatory burdens on importers and lower taxes on consumers. What’s not to love?