Emerson Duty-Free Owner Calls for Urgent Regulatory Changes

The owner of the Emerson Duty Free Shop is urging the Canadian government to implement “critically important” regulatory changes as cross-border traffic continues to decline. Simon Resch’s plea comes amid a significant drop in Canadian travelers returning from the United States, which has severely impacted duty-free businesses.

Recent statistics from Canada’s national agency reveal that the number of Canadians returning by car from the U.S. has fallen markedly. In July 2023, there was a 36.9 percent decrease, marking the seventh consecutive month of decline. This trend has resulted in closures of several duty-free shops, including the Woodstock Duty Free Shop in New Brunswick and the Peace Bridge duty-free store, which went into receivership in April.

Resch noted that the current situation is unsustainable, stating, “Things have been going as you might expect. It’s a challenge, it’s a struggle.” He has seen his employee count shrink from over 30 staff members in peak season six years ago to just six currently. The decline in traffic has led him to reduce his inventory purchase volume by around 75 percent, significantly impacting the business’s viability.

As summer typically represents a high point for sales, Resch is now considering whether to continue operating the duty-free shop or seek alternative uses for the land. He emphasized that converting the store into a grocery outlet is not practical, as the customer base mainly consists of travelers and truckers.

Resch is advocating for the removal of what he describes as “discriminatory regulation,” particularly concerning excise taxes on tobacco products, one of his store’s biggest sellers. American duty-free shops do not impose such taxes, making their products more appealing compared to the higher-priced items sold at his location. He noted the presence of illegal cigarette packages littering his store’s grounds, illustrating the challenges posed by competition from unregulated markets.

Furthermore, Resch seeks permission to expand the range of products available at duty-free stores, as Ottawa currently dictates what can be sold. He believes that allowing sales of fuel without domestic excise taxes would provide much-needed support to border communities.

The Frontier Duty Free Association (FDFA), which represents many Canadian duty-free shops, echoed Resch’s concerns. In June, the FDFA, along with Canadian border mayors, wrote to the federal government requesting financial assistance and clarity on export regulations. Barbara Barrett, the FDFA’s executive director, stated, “We’re in a crisis, and the crisis is not of our making.” She highlighted that sales across the country have decreased by between 50 to 80 percent in recent months.

Barrett emphasized the importance of government support, urging officials to recognize that duty-free businesses are viable but need help to navigate this challenging period. “To the government, I would like them to understand that this is a moment in time, and things will get back to normal,” she said.

Addressing the issue of excise taxes, Caroline Feggans, a spokesperson for the Department of Finance Canada, noted that these taxes are intended to generate revenue and discourage consumption. “It would be inappropriate for the Department of Finance to comment on potential or future policy decisions of the Government of Canada,” she stated.

Ted Falk, the Member of Parliament for Provencher, acknowledged the situation faced by duty-free stores and indicated that aligning excise tax policies could be a critical consideration for the government. He remarked, “They’re an excellent source of employment for the border communities,” and urged Prime Minister Mark Carney to address the matter promptly.

Resch’s family established Canada’s first land duty-free shop over 40 years ago, highlighting the significant legacy at stake. He stressed the urgency for change, stating, “Change is critically important to keep the industry from folding.”

As the Emerson Duty Free Shop and other similar establishments face ongoing challenges, the call for regulatory reform becomes increasingly vital for their survival.