The Great iPod Tax Crisis of 2013 - Macleans.ca

The Great iPod Tax Crisis of 2013

How the cost of an iPod became the signature issue of the budget

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Last week, Mike Moffatt suggested that the tariff increases introduced in the budget would result in an increase in the price of iPods. The Harper government claimed otherwise. The Globe and Mail subsequently retracted Mr. Moffatt’s original post. And then Moffatt penned a second post to explain his perspective.

I take the Finance Department at its word that iPods have been imported using the 9948.00.00 code, but am uncertain how the CBSA came to this decision in light of the precedent set by the Jam Industries case.

It is hard to believe that on further scrutiny – especially given the potential future tariff implications that didn’t exist before the budget announcement – the CBSA would be able to justify a 9948.00.00 classification for iPods. This certainly warrants further review and clarification by the government, so that importers and consumers can have greater comfort about where they really stand.

The Canadian Press added its reporting.

The federal government is tightening up tariffs on imported products such as televisions and iPods that receive a special exemption when used with computers. Importers owe about $16 million from 2011 alone due to a reassessment of customs duties, according to a memo from the Canadian Border Services Agency, released under the Access to Information Act and obtained by The Canadian Press.

The memo from March 2012 — which includes a handwritten notation to keep “the minister” informed — says the crackdown “will likely result in a significant amount of customs duty being reassessed, and will not be well-received by the importing community.” The agency has ruled importers who use the computer exemption must get certificates from the end users — consumers, in most cases — that certify the product will be used with a computer. No certificate, no exemption, says the agency.

Today, Moffatt presents two CBSA documents and restates his position.

My position that importers cannot meet the requirements of 9948 rests on three straight-forward premises: 1. It appears that sellers of iPods and MP3s are required to collect “end use certificates” from the final consumer on each sale, and be able to present these to the CBSA if audited. 2. The 9948 requirement for “end use certificates” appears to be actively enforced by the CBSA. 3. Retailers cannot reasonably collect these certificates from consumers when they buy an iPod.

These three, put together, make retail sales of iPods and MP3 players ineligible for 9948 and therefore subject to an iPod tariff.

All of this is problematic for the Conservatives because of previous protestations like this and this and this and this and this.

Unchallenged so far are any of the other tariff increases that Moffatt has identified which will increase the price of imported bicycles, baby carriages, school supplies, wigs, USB drives, coffeemakers, rugs, paintbrushes, plastic tableware, sandals, scissors and carving knives.

Update 4:46pm. And now, via the Canadian Press, Sony claims the existence of an iPod tax.

Sony of Canada says Canadian consumers could soon face higher prices on some electronics, such as televisions and iPods, because it’s all but impossible for importers to apply for exemptions from a controversial tariff.

Mark Trylinski, logistics director at Sony of Canada, says 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. Trylinski — who predicts a price spike of about five per cent — says companies may also decide the customs duties on some items mean it no longer makes financial sense to import them.