The Broadcasting and Telecommunications Legislative Review (BTLR) panel has stated that it does not believe the government should implement a “Netflix Tax,” but that it should be charged a sales tax.
The final report released by the panel has been long-awaited after companies filed their submissions last year. The panel was tasked with reviewing Canada’s communication legislative framework in relation to content creation in the digital age, net neutrality and cultural diversity.
It recommends that online streaming services should be required to devote a portion of their program budgets to Canadian programs.
“We want to be clear that we are not recommending that Canadian content be supported by the so called ‘Netflix Tax’ — charging consumers an extra levy on subscriptions to such services as Netflix,” the review report states.
It says that instead of a Netflix tax, “it is more appropriate to establish a regime that requires such online streaming services that benefit from operating in Canada to invest in Canadian programming that they believe will attract and appeal to Canadians.”
This panel’s approach to streaming services aims to ensure a meaningful contribution to Canadian cultural policy objectives. The report states that this shouldn’t have to lead to higher prices for consumers.
Netflix currently only pays sales tax in Saskatchewan and Quebec.
“The application of GST/HST to foreign online services is a different matter. Consistent with actions taken by some provinces and many other countries, we recommend that sales tax be applied equitably to media communications services provided by foreign online providers,” the report reads.
Doing so will eliminate the disadvantage to competing Canadian providers, according to the report.
Netflix has previously stated that it already does enough in Canada by spending on the production of content in Canada. It has said it will spend at least half a billion dollars over five years to create Canadian content.
“We all have a role to play in supporting the future of film and television being created in Canada,” a Netflix spokesperson told MobileSyrup in response to the BTLR report.
“We look forward to working with the government as it proceeds to modernize Canada’s broadcasting and telecommunications laws. The local industry is flourishing; we will continue investing in made-in-Canada productions and stories, bringing them to the world.”
Universal access to broadband
The panel recommends that an objective to reach universal access to broadband should be enshrined in the Telecommunications Act.
It says that the goal of affordability can be reached by continuing to foster competition. This would be done by requiring the CRTC to monitor the state of competition in electronic markets to ensure that rates are just and reasonable.
The goal can also reached by requiring the CRTC to regularly examine the affordability of telecommunications and implement measures to improve affordability when needed.
Additionally, through its recommendations, “more funds would be spent on the objective of universality, since all electronic communications service providers, including Internet service providers, above a revenue threshold to be set by the CRTC, would contribute proportionately to the CRTC Broadband Fund.
Accelerating the roll-out of 5G
The panel says its recommendations will accelerate the roll-out of advanced networks in three ways. First would be by granting access to all forms of public property such as utility poles for passive infrastructure.
Secondly, “a new streamlined approach would be implemented for the approval of an expanded range of telecommunications equipment needed for 5G and other technologies in the future, while continuing to ensure that all devices adhere to security, privacy and accessibility standards.”
Lastly, it says there should be a more policy-oriented approach to spectrum regulation and an expanded regulatory toolkit would include dynamic approaches to assign spectrum.
Reform the CBC
The panel has suggested that the CBC should be transformed into a publicly funded model that is ad-free. It suggests that the CBC should elimiate all advertising from the service, starting with news content.
The “public media institution” would have a new focus to showcase national, regional, local and Indigenous communities. This would happen through the federal government entering into funding commitments with the CBC.
Fundamental changes to the CRTC
In order for these changes to be made, the panel suggests that the CRTC should be renamed to the Canadian Communications Commission because the current name is dated in a world that has moved beyond conventional radio and TV stations.
The report outlines that a renewed CRTC would have a proactive evidence-based orientation that recognizes market distortions and challenges early on and allows consumers to advocate for themselves.
It wants to require the “the CRTC to prepare and publish reports and evidence-based information on key issues and trends. These resources would provide a clear basis for the substantive decisions being taken and the impact they are expected to have.”
Another recommendation is to improve funding for public interest participation and the creation of a Public Interest Committee funded by the CRTC.
In response to the BTLR report, Ian Scott, Chairperson and CEO of the CRTC, stated, “The comprehensive and robust report touches on a number of areas that are critical to our mandate and we are studying the report with great interest. At first glance, it is clear that the panel recognizes that fundamental changes need to occur to fully enable the CRTC to act in the public interest. We look forward to future legislative changes to effectively fulfill our mandate in this new environment.”
Update 01/29/2020 at 4:00pm: Added comment from Netflix regarding the report.