Ottawa studied ways to tax Netflix

OTTAWA — Federal officials have taken a close look at how the government can make online services such as Netflix voluntarily collect sales tax, similar to the model Quebec plans to bring in next year.

Pages of briefing notes provided to Heritage Minister Mélanie Joly over the course of 2017 detail how certain governments around the world have required foreign-based streaming services to register with the government in order to collect and pay taxes, rather than imposing new taxes on the services.

The notes, obtained by the Canadian Press under the Access to Information Act, said countries should make it as simple as possible for companies to register with national tax offices to collect revenue on which they are currently missing out.

Quebec’s Liberal government announced in its budget Tuesday that it would do exactly that beginning next year to put provincial sales tax on Netflix and any purchases from Amazon. The provincial government believes it could earn about $154.5 million over the next five years from the measure.

The cost of a Netflix subscription has gone up in two of the jurisdictions reviewed in the documents to Joly — Japan and Australia — after the company added a sales tax to its fees.

The NDP called on the federal government Wednesday to force Netflix to collect and remit taxes just as it does in jurisdictions such as the European Union.

“The government needs to modernize its laws and put everyone on the same footing. It’s just common sense,” NDP parliamentary leader Guy Caron said during question period.

“The reality is that taxpayers would pay these taxes,” Prime Minister Justin Trudeau fired back. Trudeau was adamant the Liberals would not increase taxes for Canadians “who are already paying enough for their digital subscriptions.”

Trudeau’s position on the tax issue has not been an easy sell to Quebec Liberal MPs who have been under pressure from their constituents to reverse the party’s stand. Netflix has been a lightning rod of discontent in Quebec ever since it agreed to invest $500 million over five years in Canada as part of the federal government’s cultural policy, which included a promise to set up a Canadian production facility. Netflix also committed to spend $25 million to develop French-language content.