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Stirring news recently, the Canadian federal government has announced that the “tampon tax” would officially be removed by July 1st, 2015. While the goal of ridding the country of antiquated tax and tariffs is noble, the law change has only done so much. While the “tampon tax” may be gone, the “tampon tariff” is still alive and well. This means there are still some taxes on tampons in Canada.
What’s The Problem With The “Tampon Tax” These Days?
The antiquated tax and tariff laws do little to benefit anyone. The federal government only generates around $4 million in tax revenue from the “tampon tax” annually. However, the tax generates a significant amount of red tape and ties up importers from offering better prices to Canadians.
The Confusion Surrounding The “Tampon Tax”
Some revenue may be generated by this tax, but it may not worth it. This red tape is confusing for all involved. It is not easy to determine if a feminine product will be subject to a tariff or not. While not diving too deep and making your head turn, here is a quick breakdown of the taxes regarding feminine products:
There is no tax on feminine products relating to paper pulp, paper, cellulose wadding and webs of cellulose fibers.
Importers must pay a 12 percent tax on goods created of textile waddings.
Importers must pay a seven percent tax on goods created from other materials.
Other Fine Details
Not only do these rules apply, but there are finer details importers must pay attention to. For example, many importers from certain countries are eligible for preferential treatment with regards to tariffs. These tariffs include UST (NAFTA United States Tariff), along with the GPT (General Preferential Tariff). This means many importers do not pay anything in taxes on feminine products. However, these rules are not exactly simple – there are 100’s of pages about preferential treatment and tariffs.
Chapter 99 Override Clauses
And, even if an importer faces tariffs on tampons – they can occasionally use a Chapter 99 override clause to bring the products in duty-free.
What’s The Point?
The Canadian federal government is wasting resources to generate a measly $4 million a year. With over 92% of the tampons imported into Canada coming from the United States and eligible for tariff-free status, the red tape is simply an annoyance for all.
While Canada has been working to kill the “tampon tax” – there is still work to be done. Canada can use this opportunity to kill another one of the old and unnecessary tariffs. With such little revenue generated, it’s time to remove the red tape and make life a little simpler for all involved.