The Canadian Press - ONLINE EDITION

Federal budget to include promise to take on Canada-U.S. price gaps: official

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Minister of Finance Jim Flaherty speaks at a pre-budget press event at the factory for the Canadian shoe company Mello Shoes in Toronto on Friday February 7, 2014. THE CANADIAN PRESS/Aaron Vincent Elkaim

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Minister of Finance Jim Flaherty speaks at a pre-budget press event at the factory for the Canadian shoe company Mello Shoes in Toronto on Friday February 7, 2014. THE CANADIAN PRESS/Aaron Vincent Elkaim

OTTAWA - The Conservative government is poised to crack down on multinational companies that charge Canadian customers more than Americans on everything from books to clothing and appliances.

A government official tells The Canadian Press the Tories will promise legislation in Tuesday's budget to stop "country pricing" — when multinational brands set different prices in Canada and the United States.

The official, who spoke on condition of anonymity in advance of the budget's release, says the legislation will address the price gap and empower the country's competition commissioner to enforce the new rules.

The government also intends to monitor whether last year's elimination of tariffs on baby clothing and sports equipment — some of them as high as 20 per cent — is being passed onto consumers at the retail level.

A recent report by the Retail Council of Canada, which has worked with the government to tackle country pricing, concluded the tariff cuts have resulted in lower prices for consumers.

Finance Minister Jim Flaherty is expected to chop more tariffs on Tuesday, although the Consumers Association of Canada has expressed skepticism about whether such steps do indeed cut costs.

The new initiatives are part of the government's effort to respond to consumer complaints about higher costs, price-gouging and price discrimination, the official said.

Flaherty has hinted for months — including in last fall's throne speech — that a crackdown on companies taking advantage of the Canada-U.S. price gap would be in the cards.

Following the speech, Flaherty said officials in his department were sitting down with major retailers to determine why Canadians are charged higher prices on an array of goods.

"There are some companies that look at Canada as a small market, relatively well off, with a large middle class, and willing to pay a little more," he said at the time. "And they'll pay."

While he confessed to being wary of interfering with the free market system, he added: "There are always persuasive techniques that can be used to nudge people in the right direction."

A Senate finance committee report released last year, however, suggested several complex factors were to blame for price differences between Canada and the U.S., including higher transportation costs in Canada, more onerous packaging requirements, disparate provincial regulatory requirements, a smaller Canadian consumer market — and tariffs.

Even though the Conservatives lauded the elimination of some tariffs in last year's budget, the same government also hiked duties on imported goods from more than 70 nations, including China, to help bring down the deficit. That move was estimated to have cost Canadians $330 million a year in higher retail prices.

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