Canadians now increasingly engage in “out-shopping,” which is shopping

Question

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

Casinoking · Accepted Answer

Increase in taxes is a mere speculation .It can't be derived from the argument. IMO "D". If similar goods are not available across the border why would anybody engage in out-shopping?

hogann · Answer

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.

GMAT TIGER · Answer

I go for A. All other choices are irrevalant.

(A) Most likely....
(B) Nothing is said about ------ a reciprocal tariff on cross-border shopping in the other direction will be imposed.
(C) Definitely not with the decreasing tax amount.
(D) Nothing is mentioned about - brands.
(E) Also not mentioned..........

aagar2003 · Answer

IMO A is the answer. The only answer could have been B but we cannot say anything about the taxes on the region 'outside' Canada from where the things are being imported.

pqhai · Answer

IMO, A is correct.
I think KEY here is:  tax that pays for Canadian social services  ==> taxes that government collects will be paid for social services ==> If revenue from taxes reduces, but costs for social services are not reduced ==> government must increase taxes to offset the loss.

Consider each answer:

(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.
  Correct.

(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.
 Wrong.  No information about reciprocal tariff.

(C)  The amounts  the Canadian government pays out to those who provide social services to Canadians are  increasing .
Wrong. The stimulus does not say the costs for social services increase.

(D) The  same brands of goods  are available to Canadian shoppers across the border as are available in Canada.
 Wrong.  Nothing about good bands.

(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.
 Wrong.  No information about import taxes.

Waiting for OA.

ssbisht · Answer

(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.
A continued trend in out-shopping means that lesser people will pay Canadian goods-and-services tax which will mean that government has to increase tax rate to be able to pay for the Canadian social services.
This falls within the boundaries of what is given in the premise and hence is the correct answer.
However there is an assumption here that the amount of shopping inside Canada has not increased enough to counter the out-shopping. I am going with this choice considering that the author has mentioned significant level for out-shopping. Also no other choice is even close to being correct.

(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.
Nothing is given about taxes on other side so we shouldn't assume anything

(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
The amounts provided for social services may increase because of increase in population or many other reasons and out shopping has nothing to do with it.

(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
Taking about Brand is out of scope.

(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.
Again out of scope. Nothing mentioned about the taxes on buying across the border.

solitaryreaper · Answer

Hi Experts !

I have a doubt in option A

Prompt says that "goods-and-services tax that pays for Canadian social services". But it doesn't mean that this tax is the only source of income for the Canadian social services. May be revenue from exports and other services are also paying for the social services.

so how's A necessarily true ?
 A continued trend in out-shopping means that lesser people will pay Canadian goods-and-services tax which will mean that government has to increase tax rate to be able to pay for the Canadian social services.

a decrease in the tax income might be recovered by using a greater share of revenue from other sources of income to pay for Social services or by increasing tax rate.
Therefore an increase in tax is not necessary (not a must be true situation).

Any thoughts?

While D says:

(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.

Argument says :
Canadians now increasingly engage in “out-shopping,” which is shopping across the national border, where prices are lower.

Obviously, why they are doing out-shopping because they are getting lower prices for the things they need(just like a discount store).
A higher price of say an x-box in the home country is driving them to buy it from outside-Canada where they can get it for a lower price.

A brand or commodity that is absent in the Canadian market (and anyhow citizens are buying it from New York) doesn't come under the spectrum of this argument which basically relies on the cost advantage.

In the light of this option D is a correct inference for the argument to stand legit.

Opinions ?

Regards,
SR

AryamaDuttaSaikia · Answer

In MBT (must be true) questions - We need to prove the answer choice from the information given within the stimulus. (Implied meaning)

A - Option A - talks about "out -shopping" and tax rate - mentioned in the stimulus.

D - Brands of goods - not mentioned in the stimulus.

RanjanSury · Answer

Hi Solitaryreaper,

Good question.

D is more of an assumption if you think about it. On a find the assumption question this answer choice would be a very good candidate for a right answer. However we have to stick to what the question asks

Which one of the following is best supported on the basis of the information above?

Now coming to your doubt.

Prompt says that "goods-and-services tax that pays for Canadian social services". But it doesn't mean that this tax is the only source of income for the Canadian social services. May be revenue from exports and other services are also paying for the social services

Yes it is true that there could be other sources. The passage does not explicitly state that this is the only source either, so it's already understood that there could be multiple sources of revenue. The point however is that if people continue out shopping and amount paid by the government for social services remains the same, then assuming that costs of social services are increasing, government needs more revenue from goods and taxes and hence will have to INCREASE tax rates. This is what choice A coveys.

pkshankar · Answer

Option A is the correct answer and is a direct inference of what is stated. If there is more out shopping and people don't buy locally then in order to maintain the amount paid towards social service the products bought locally should be charged at a higher rate (the lesser the local consumption of goods the higher the rate the government needs to charge if it intends to maintain the current amount towards social service.)
No other option except A can be inferred.

abhishekdadarwal2009 · Answer

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. Correct choice, although goes little too far but we cant deny this, also best contender after POE.

(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. this choice goes too far out. not discussed and not required.

(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing. not mentioned and we can assert this.

(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada. good contender but we never discussed the brands.Brand loyalty is not discussed here so out of scope.

(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada   wel may be but its not mentioned anywhere and for this type of questions we must stick to what is specifically mentioned only!

shanks2020 · Answer

KarishmaB   AndrewN   MartyMurray

Can you please confirm if this question requires a "must be true" statement? As per the understanding, inference/conclusion-based Q. need to be 100% deducible, without any assumption. However, option A here requires us to assume that sales from internal goods reduce if outside shopping increases. Is this question different from typical Inference Q. because the Question stem mentioned "best possible answer"? Or am I missing something?

KarishmaB · Answer

Of the 5 choices, it is best supported but it certainly is not 'must be true.'

MartyMurray · Answer

A question that uses "is best supported" is a Conclusion question rather than an Inference question.

The correct answer to a Conclusion question does not have to be something that "must be true" given what the passage says. It just has to be logically supported by the information provided by the passage.

That said, the credited answer to this question goes pretty far even for a Conclusion question answer, though it does basically follow from what the passage says.

shanks2020 · Answer

MartyMurray

Thanks for this clarification. Till now, I was of the view that conclusion = Inference!

VerbalBot · Answer

Automated notice from GMAT Club VerbalBot: 

A member just gave Kudos to this thread, showing it’s still useful. I’ve bumped it to the top so more people can benefit. Feel free to add your own questions or solutions.

 This post was generated automatically.

Canadians now increasingly engage in “out-shopping,” which is shopping

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

Canadians now increasingly engage in “out-shopping,” which is shopping

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards