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# Canadians now increasingly engage in out-shopping, which is

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Senior Manager
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10 Oct 2009, 09:42
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Canadians now increasingly engage in “out-shopping,” which is shopping across the national border, where prices are lower. Prices are lower outside of Canada in large part because the goods-and-services tax that pays for Canadian social services is not applied.

Which one of the following is best supported on the basis of the information above?
(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate.
(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses.
(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.

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10 Oct 2009, 15:21
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I'm going with A

Social Services are paid through GST. GST = Sales *X%. If Social Services stay the same and the amount of Sales decreases the only way to pay for social services is to increase the % charged on the remaining sales.
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10 Oct 2009, 16:43
on the basis of the information given i would go with d : canadian shoppers are getting the same brands outside the border.
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11 Oct 2009, 10:32
IMO E..from the info given on people going outside Canada for shopping and govt. applying tax in the inside Canada...v cn legitimately conclude E.
IMO D talks about brands availble vich is out of scope.
A is also close but its conditional...so E is the best option in IMO.

OA pls
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11 Oct 2009, 13:38
Thanks all for the participation! The OA is A. I believe the reasoning given by hogann is logical.. The reasoning clearifies why we should choose option A over other options..
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12 Oct 2009, 06:17
Hi,
The reasoning provided by hogann is correct but pls let me know wts wrng in E?..we cn conclude E logically ....
pls correct me if i m wrong!
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12 Oct 2009, 09:48
Answer (E) states that "Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada". If that statement is true then people would not engage in out-shopping purchases since when they go back to Canada they will have to pay taxes anyways, which completely kills the reason why they would engage in out-shopping in the first place. Therefore E is wrong.
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12 Oct 2009, 10:25
I got it..thnks! 11MBA
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21 Oct 2012, 07:40
Indeed a tough question, considering its words, and must say indeed a great explanation by hogann.
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14 Oct 2013, 06:24
hogann wrote:
I'm going with A

Social Services are paid through GST. GST = Sales *X%. If Social Services stay the same and the amount of Sales decreases the only way to pay for social services is to increase the % charged on the remaining sales.

Dude, that's a great explanation. Kudos for you!
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16 Dec 2013, 01:39
i wouldn't have thought of A even if I had read the question a hundred times
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06 Jun 2015, 08:30
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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24 Jul 2016, 04:09
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Re: Canadians now increasingly engage in out-shopping, which is   [#permalink] 24 Jul 2016, 04:09
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