Committee calls for tax on online services like Netflix

A Liberal-dominated House of Commons committee is calling on the Trudeau government to make internet giants like Netflix collect and remit sales taxes as part of a series of recommendations to help Canada’s small businesses compete online. The international trade committee’s report on e-commerce issues recommended the government apply sales taxes “on tangible and intangible products” sold through online platforms, and tax the profits from those sales.

It also calls on the federal government to cut red tape and create policies and programs that are agile enough to help domestic companies get a bigger cut of the trillions of dollars associated with the global online marketplace. Small and medium-sized businesses could lose customers to larger firms based in Canada and abroad, it warned, noting that the future success of such companies “partially depends on federal public policy.” Foreign-based streaming services without a physical presence in Canada don’t have to collect or remit sales taxes, leaving it up to consumers to pay the sales tax to tax collectors — something that, in reality, rarely happens. However, Conservatives on the committee say they want Trudeau to honour his pledge not to introduce a Netflix tax, writing in a dissenting report that such a tax would only create additional costs for consumers and hurt Canada’s small businesses.

“We support the bulk of the recommendations in the main report, but must disagree on the tax recommendations,” Conservative MP John Brossard said in the House. “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.”

Prime Minister Justin Trudeau has been adamant his government wouldn’t increase taxes on online subscriptions.

However, Finance Minister Bill Morneau has suggested the federal government wants to ensure online companies pay their fair share of taxes.

Canada and other G7 countries have set a 2020 deadline to craft an international tax regime so companies based in one country can pay taxes for goods and services they sell in another.