Is the iPod tax just around the corner?

by Andrew Roach on April 8, 2013

During last month’s budget, it was announced that there were plans for a tax on many leading technological goods made overseas.

It would mean that the price will increase by 5% on many products such as iPods, smartphones and tablets made in places such as China.

However, the government has said this won’t apply to these devices thanks to a special exemption made for devices that plug into the computer.

So what are the actual rules surrounding the supposed tax and will it have an impact on our favourite handheld devices?

Back at the budget, the department of Finance said that goods made in countries such as China would lose their current exemption from tariff increases.

That would mean that all these devices would then be liable to the 5% tax increase that is set to be implemented on foreign goods in 2015.

Border agencies have also been keen on cracking down on imported product thanks to the importers owing millions in fees to the government.

In 2011, importers owed border control nearly $16 million in unpaid fees especially on technology products which has forced the government to take action in some form.

However, adding a tax onto foreign electronic products isn’t that simple thanks to an old loophole in trade laws.

Thanks to a loophole made in 1987, it means that any product that is able to run through a computer will be given special exemption to any taxes imposed on foreign goods.

This means that iPods and smartphones qualify under this group thanks to their ability to connect to computers via a USB cord.

Despite the exemption, the manufacturers do need to obtain a certificate and provide it to border agencies when the product arrives on Canadian shores so it qualifies for the loophole.

To try and clarify the situation, Finance Minister Jim Flaherty has come back saying that the public doesn’t need to worry about the tax and that the exemptions will stay in place on iPods and smartphone for the moment.

The whole debate has been a mess for the government and the exemptions are likely to stay in place as a way to limit the damage and confusion caused from the announcement in the budget.

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Written by: Andrew Roach www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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