Ottawa favors the destruction of new goods

Even though the practice has been denounced for years, merchants continue to destroy brand new merchandise before throwing it in the trash, as I wrote at the end of winter. I was not at the end of my surprises. I was told that Ottawa, far from discouraging this waste, instead pays money to companies that take out the scissors.

You read correctly.

A clothing store that finds itself with piles of pants that its customers don’t care about can destroy them and get a refund for the customs duties it paid when importing them. It’s quite tempting, because if he donates it to charity, he won’t get a penny^⁠1.

The extent of the destruction phenomenon remains a mystery, unfortunately.

The Canada Border Services Agency (CBSA), which manages this program, says it has no idea of ​​the total value of the goods that are destroyed, year after year. She also claims not to know which industries take advantage of this measure nor what types of products are most affected.

This is quite curious, since the K32 form that companies must complete to receive a reimbursement (drawbackin CBSA jargon) contains boxes in which it is necessary to describe the destroyed merchandise “with sufficient detail” and specify its value.

The Agency only knows that over the past four years, it has remitted almost $20 million to businesses as part of its “Outdated or Surplus Goods Program”.

The evaluation based on this amount of the value of the ransacked goods is hazardous, since each category of goods is subject to a precise customs tariff. For clothing that is not imported from the United States or Mexico (countries with which there is a free trade agreement), the rate is 18%. An office chair: 7.5%. A backpack: 11%. Shoes: 20%, reveals Ottawa’s online customs tariff assessment tool^⁠2.

What is clear, however, is that the quantity of new goods which end their life in a container is necessarily considerable. And their value is counted in millions of dollars.

What is the logic behind this? Ottawa responds that it wants to help businesses compete internationally by not forcing them to take excess merchandise out of Canada to recover the customs duties paid. “By authorizing the destruction of these goods,” the Agency explained to me by email, “the shipping costs associated with the export of worthless goods are eliminated. »

Équiterre, who discovered the existence of the “Outdated or Surplus Merchandise Program” at the same time as me, judges that it is “from another era” and “immoral”. In fact, whether for ecological or social reasons, it is not normal that it is more profitable to throw away than to give to people in need.

In a letter sent on April 11, Équiterre also urged the Minister of Finance, Chrystia Freeland, “to put an end to this absurd program, so that the shameless waste of new objects stops.”

Currently, any business that holds “obsolete or surplus” goods can reclaim customs duties paid, if three other conditions are met. Items cannot be used in Canada, they must be “undamaged prior to destruction” and “destroyed as directed by the CBSA.”

The Agency told me that clothes returned to the store because of a broken zipper or shrinkage, for example, do not qualify. Rather, they are considered used or damaged goods. Guidelines for proper destruction were not communicated to me. No photos of destroyed property are required.

Difficult to say, therefore, whether all the clothes and the three pairs of boots cut^⁠3 which were in the container of a Winners visited by my girlfriend in February resulted in a check from Ottawa. But why would we destroy merchandise returns if it provides no financial benefit?

Some people who work in retail have told me that this prevents trash scavengers, better known as miscellaneous dumpster, to be reimbursed for the discarded merchandise. The fraudulent scheme can certainly be foiled with a little imagination and good will.

With these two qualities, the government could, for its part, prohibit the destruction of new clothing, as the European Union has done, or at least encourage donations.

“The most sustainable thing is to give,” as the president of the Aubainerie stores, Jean-Frédérick Pépin, told me so well. But we still need to give momentum to sustainability.

1. The donation of goods that are part of a company’s inventory may give rise to a tax credit, if the charitable organization provides a receipt. However, the company must then include, in its income, the fair market value of the donated goods. The increase is then offset by the deduction of the donation, so that the net result is zero.

2. Visit the CBSA’s “Estimate Duties and Taxes” webpage

3. Read “Destroying brand new property: enough is enough!” »