Level the playing field

Prime Minister Justin Trudeau has just been handed a good piece of advice from his own members of Parliament. He should take it.

The House of Commons committee on international trade, a group dominated by Liberal MPs, recommended last week that the government level the playing field between Canadian businesses and foreign-based internet giants.

It should, they said, levy sales taxes on companies that provide online services in Canada in the same way it taxes firms that are physically based here.

This makes eminent sense. What’s the point of a policy that gives foreign multinationals a clear advantage over companies that employ Canadians, buy Canadian supplies and services and pay taxes to all levels of government?

The current system is a gift to foreignbased companies such as Netflix, which have little or no actual operations in Canada but manage to sell hundreds of millions of dollars’ worth of services in this country, competing successfully against domestic providers. Facebook and Google, too, benefit mightily from having little physical presence here and having huge tax advantages.

This is the second time a Liberal-dominated Commons committee has urged the government to act. The heritage committee spoke out last June, with a somewhat different proposal to tax the internet giants.

The government dismissed that idea, and it has brushed off the latest suggestion as well. Trudeau seems convinced that a “Netflix tax” would be unpopular, and his government chose instead to cut a complicated deal for Canadian content with the streaming service last fall.

It should think again. Canada is falling behind other countries in figuring out ways to regulate and tax the online economy. We’re allowing foreign multinationals to enjoy a huge advantage and failing to collect taxes on the revenue they generate here. The sooner that stops, the better.

Canada is falling behind in figuring out ways to regulate and tax the online economy