Duty-free stores left ‘for the wolves,’ Emerson owner says, calling for regulatory changes

As cross-border traffic continues to sag, the Emerson Duty Free Shop’s owner is calling for “critically important” regulatory changes to stay afloat.

Four months ago, Simon Resch joined fellow duty-free store owners across Canada in issuing a plea for federal support.

Since then, Resch has watched his peer close the Woodstock Duty Free Shop in New Brunswick. The Peace Bridge duty-free store, at Canada’s second-busiest land border crossing, went into receivership in April.

Fewer Canadians are driving across the border. Canada’s statistics agency keeps tracking year-over-year declines in Canadians returning by auto from the United States. July — a 36.9 per cent decrease — was the seventh consecutive month on the downward trend.

Many Canadians have boycotted southern travel amid a United States-led trade war and U.S. President Donald Trump’s comments about annexing Canada. Some fear different treatment in the neighbour country.

Canada’s government has largely left duty-free stores “out there for the wolves,” Resch said.

“Things have been going as you might expect,” he continued. “It’s a challenge, it’s a struggle.”

He employed upwards of 30 summertime staff six years ago. His current employee count is six.

He’s dropped his purchase volume for the land border store in Emerson, Man. by roughly 75 per cent, he said. Summer is typically the shop’s busiest season.

“For me, it really is a consideration — do we continue with duty-free, or do I try to repurpose our land?” said Resch, who helmed the store — and saw major traffic loss — during the COVID-19 pandemic.

Change is easier said than done: customers are travellers and truckers. Converting the space to a grocery store, for example, isn’t feasible, Resch said.

“What we would like to do is work with the federal government to remove what I would call discriminatory regulation,” he said.

He highlighted excise taxes on products like tobacco, one of the shop’s biggest sellers. American duty-free stores don’t apply such taxes.

Illicit cigarettes are cheaper than the taxed products Resch sells. He finds illegal cigarette packages littered on the duty-free shop’s grounds, he said.

He’s also seeking clearance to sell a wider variety of goods. Ottawa controls which items duty-free stores can sell. Owners like Resch privately operate their stores under a federally regulated licence.

“Selling fuel free from domestic excise taxes is a no-brainer,” Resch said, adding it would “breathe some life” into border communities.

Canadian border mayors and the Frontier Duty Free Association (FDFA) penned a letter to the feds in June, asking for financial assistance for duty-free stores and clarity on export rules.

“We’re in a crisis, and the crisis is not of our making,” said Barbara Barrett, the FDFA’s executive director.

The association represents 32 Canadian duty-free stores technically but 31 in practice because of the Woodstock hub’s closure. More could follow without federal support, Barrett asserted.

Summer sales are down 50 to 80 per cent across the country’s duty-free stores, she said.

“To the government, I would like them to understand that this is a moment in time and things will get back to normal, and that we are viable businesses,” Barrett said. “But we just need some support to get through.”

Excise taxes are among the issues the FDFA has raised.

Taxing tobacco and vape products raises revenue and aims to discourage consumption, said Caroline Feggans, a spokeswoman for the Department of Finance Canada.

“It would be inappropriate for the Department of Finance to comment on potential or future policy decisions of the Government of Canada,” Feggans wrote in a statement.

Ted Falk, MP for Provencher, said excise tax alignment is “something the government is going to have to consider.”

The Conservative politician said he spoke with Resch in June about the duty-free store’s situation.

“They’re an excellent source of employment for the border communities,” Falk said. “This is something Prime Minister Mark Carney needs to address sooner than later.”

Resch’s family began Canada’s first land duty-free shop more than four decades ago. Change is “critically important” to keep the industry from folding, Resch said.

– With files from the Canadian Press

gabrielle.piche@winnipegfreepress.com