A Liberal-majority House of Commons committee on international trade has recommended Prime Minister Trudeau’s government enforce a ‘Netflix Tax.’
In a report on e-commerce issues, the international trade committee recommended that the government apply sales tax on “tangible and intangible products” sold through online platforms, as well as tax the profit from those sales.
While the common shorthand for this kind of taxation has become known as ‘Netflix Tax,’ it would actually apply to any foreign streaming platform, including music streaming services like Spotify.
Those types of companies currently do not have to charge and remit sales tax or pay corporate tax due to the fact that they have no physical presence in Canada.
The international trade committee’s report further calls on the government to create policies and programs to help Canadian companies in the online marketplace, expressing a concern that otherwise those domestic platforms will lose out to larger global platforms.
Dissenting Conservatives in the committee filed their own report stating that they disagreed with the taxation recommendation.
“The main report effectively recommends that Canadians be forced to pay a Netflix tax, to be taxed on every song they download on iTunes and every movie they watch on YouTube. We recommend otherwise,” reads an excerpt from the Conservative’s report.
Trudeau is on the record as being stridently against any sort of ‘Netflix Tax.’ In February 2018, he said in response to arguments from NDP MP Peter Julian: “The NDP is proposing to raise taxes on the middle class, which is something we promised we would not do and have not done.”
More recently, though, federal finance minister Bill Morneau stated that the government is closely studying a digital tax on major tech companies at the 2018 G20 summit.
Canada and other G7 nations have set a 2020 deadline for a tax regime on those multinational online platforms.
This news is no doubt welcome to Quebec liberals, who have been pressed by constituents to force Netflix to collect and remit federal sales tax.