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U.S.-Canada Border Fee Proposed


Richard Weber on April 6, 2011 in Tax

Mike Godfrey, Tax-News.com, Washington wrote that a proposed USD5.50 fee aimed at travelers arriving in the U.S. via sea or air, has been met with criticism from Canada. A passenger inspection fee was included in Obama’s 2012 Budget, and, although the Budget itself was delivered on February 14, attacks on the proposal began on February 17, as the finer details of the package began to emerge.

The measure would affect travelers from Canada, Mexico and some Caribbean states, who have previously been exempt from such charges. It would not, however, hit those arriving in the U.S. in private vehicles, thus sparing many cross-border shoppers. The U.S. Department of Homeland Security estimates that the levy could generate as much as USD $100 Million a year.

Canadian Prime Minister Stephen Harper made clear to reporters that he understood the complex economic situation faced by the U.S., noting: “We all know what the context of this is; they’re running deficits down there of well over a trillion dollars a year”. He did, however, add his voice to the mounting criticism that has come from concerned analysts. Harper said: “I think it’s clear the U.S. is casting around for ways to raise revenue”. He made it clear that “we don’t need additional taxes on that kind of economic activity” and that, instead, the two countries should be working to “ensure that trade and travel between our economies is easier, not more difficult”.

David Bietle, Director of the Canada Institute at Washington’s Woodrow Wilson International Centre for Scholars said that he did not believe the levy would stop Canadians flying, as the fee itself was “not that much”. He did add that the measure was “like so many U.S. issues today…not about Canada”. Bietle echoed Harper by arguing that the proposal was “about getting the income wherever you can”. Christopher Sands, a senior fellow at the Hudson Institute, stated that “it is important to raise the alarm”, for the levy “will fall on Canadians because that’s about three-quarters of the cross-border flow”.

The U.S. Budget must be approved by the U.S. Congress and would cover the period October, 2011 to October, 2012. The Budget blueprint is, however, non-binding.