Quebec parties call for Netflix to collect QST

While a recent deal with the federal government means Netflix won’t have to charge its Canadian customers GST, the provincial government is condemning the deal and says it wants to ask the streaming video company to start collecting provincial sales tax in Quebec.

It’s a position that has support of all the parties in the National Assembly. A motion calling on the government to ensure that sales tax will be collected by all foreign companies offering online services, particularly in the cultural sector, as soon as possible passed unanimously in the National Assembly on Tuesday.

While Finance Minister Carlos Leitão said Quebec would not give up its right to impose QST, he said he wants to know the details of the agreement between the federal government and Netflix before the government decides how it will proceed.

“Netflix’s service is a taxable service,” he said. “The challenge is that the company has to collaborate with the collection of the tax. For that, we have to know the position, very clearly, of the federal government.”

Leitão said he wants to see a copy of the agreement between the company and the federal government, which has not been publicly released.

The deal with the federal government sees the streaming video giant committing to spend $500 million on Canadian content over five years. In exchange, it won’t have to collect federal sales tax.

The vote by Coalition Avenir Québec MNAs in favour of the motion to collect sales taxes from Netflix was a notable about face. Last week, party leader François Legault praised the deal between Netflix and the federal government and said his party was opposed to a tax on Netflix that would be passed on to consumers.

On Tuesday, he said the deal was unfair to Quebec companies.

Meanwhile, Canada’s Frenchlanguage artist’s union has said the deal negotiated by Heritage Minister Mélanie Joly would come at the expense of Canada’s cultural producers.

“I think (Joly) genuinely thought the deal with Netflix would assuage our concerns, but it did the opposite. The fire has spread all over,” said Sophie Pregent of Union des Artistes, which represents roughly 13,000 French-speaking artists across the country. Artists say the federal government is giving Netflix an unwarranted subsidy by not forcing the company to pay taxes like it does in many other countries around the world.

Joly said she “hears” the concerns of the artists.

“The issue,” Joly said, “is how to work together so that we have tools to protect our culture online.”

Joly also dismissed the claim she has essentially given Netflix a tax break that Canadian-based production companies don’t get.

She said the government has the power to hold Netflix accountable if it doesn’t hold up its end of the deal.

The tax debate comes as the popularity of paid online streaming services is on the rise in Quebec, according to the first phase of a 2017 analysis conducted by the Centre facilitant la recherche et l’innovation dans les organisations, a digital research and development organization. The study, made public on Tuesday, shows that 53 per cent of Quebec households connected to the internet are subscribed to streaming services, a jump of 13 percentage points compared with 2016. Homes with children and/or higher incomes were among the most usual subscribers.