Monday, September 30, 2019

Taxes on foreign online streaming services no longer politically toxic

It seems like a "Netflix tax" is finally becoming a politically acceptable concept to the mainsteam political parties.
Currently, foreign online streaming services without a physical presence in Canada, like Netflix, Google, iTunes, Amazon, etc, do not have to charge federal sales tax on their sales in Canada, something that local digital companies like Bell, Rogers, etc, argue is an unfair advantage. And it certainly does seem that way when you stop and think about it. But it has long been considered politically inexpedient - at least since Stephen Harper made it so as part of his election platform, even at a time when no other party was even considering it - to tax these digital behemoths.
Over the last year, a couple of provinces - Quebec and Saskatchewan - have been charging provincial sales tax on foreign digital streaming, and the sky hasn't fallen. Other jurisdictions, including Australia, South Korea, Japan and the European Union, have also taken the plunge and required foreign streaming companies to collect sales tax. The consumer market has not dried up overnight, and no major retaliation has been brought to bear.
With this in mind, presumably, Justin Trudeau has decided to reverse his opinion on the matter and has proposed a 3% tax on foreign digital sales, joining the NDP and the Greens, who have also already proposed taxing foreign streaming services. The Liberal plan will affect advertising and digital companies with sales of over $1 billion worldwide and over $240 million within Canada (i.e. all the major players like Google, Apple, Netflix and Amazon), and is being billed as "making multinational tech giants pay their fair share". Why 3%? I am not sure, presumably so that they can be seen to be acting on the issue without pissing off the "multinational tech giants took much".
So, it may have become politically acceptable (unless you are a Conservative), but only 3% acceptable.

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