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Yet Another Postal Rate Hike

Posted 2010.12.10 9.59 in Pointless Blather

So Canada Post’s website is announcing yet another increase in the cost of sending mail. They raised the prices last January. In July, the introduction of the Harmonized Sales Tax represented another hike in the cost of sending a letter. And now they’re going up again this January.

Sure, you could claim that the HST wasn’t really a rise in the cost of stamps. I guess not. But it was a rise in the cost of mailing a letter. Overall, the cost of mailing a letter in Canada will have gone up 10 cents in the course of a single year, once the new rates hit next month. That’s a 17.5% increase, incase you’re keeping score.

Here’s the breakdown:

  • This time last year, a domestic 1st-class letter stamp cost 54 cents. Ontop of that, you had to pay 5% sales tax (GST). This brought the total cost of mailing a letter within Canada to 56.7 cents. (They’d charge you 57 cents at the register.)
  • In January 2010, they raised the price of a stamp to 57 cents. Now with the 5% sales tax, the cost of mailing the letter became 59.85 cents (that’s 60 cents at the register.)
  • On July 1st, the sales tax was raised by 8% (here in Ontario) where we went from 5% GST to 13% HST. This brought the total cost of mailing that same letter to 64.41 cents (64 cents at the register.)
  • And next month, the same 1st-class letter stamp will reach 59 cents. Add the 13% sales tax and you get 66.67 cents, which will be rounded to 67 cents at the register.

That’s a 10 cent increase over a 12-month period. 5 of those cents are on the face-price of the stamp, the other 5 are in sales tax. From 57 cents to 67 cents, is an increase of 17.5%.

Obviously, fewer people are using snail-mail. What with email, being able to pay bills online, et cetera. So for most folks, it’s probably not a big deal. If you only send a couple letters a month, then it’s maybe going to cost you 2 or 3 dollars at the end of the year.

For small businesses however, I think it is a big deal. If your business needs to mail invoices, cheques, and other stuff that isn’t a good fit for email, then your costs of running the business have gone up measurably. If you send out a couple hundred invoices per month, these rate hikes become a lot more significant.

Or how about people who aren’t computer-savvy and still rely on the postal service, folks on a fixed income… I’m thinking about older people, retired folks, like my parents.

Anyhow… it’s not the first time for a postal increase and it won’t be the last. (Canada Post have already stated they intend to raise the rates 2 cents per year till 2014.) It’s just that it feels like a tripple-whammy with the recent tax hike hitting only a few months ago.