B.C. Netflix subscribers will pay PST starting July 1
VANCOUVER A measure listed innocuously as an expansion of requirements to register to collect PST in the B.C. provincial budget was quickly dubbed the “Netflix tax” by the media and will cost the streaming service’s premium subscribers an additional $14.27 a year.
It was included in the budget and fiscal plan document in the section on tax measures, which declares that as of July 1 of this year, “sellers of goods, along with Canadian and foreign sellers of software and telecommunication services,” with more than $10,000 in B.C. sales will have to register, collect and remit provincial sales tax.
That will apply to content streaming services like Netflix, but not all such services, because some streaming companies already collect and remit PST, said Finance Minister Carole James.
According to budget documents, the measure is expected to generate $11 million in the province’s fiscal 2020-21 and $16 million in 2021-22.
“This is making sure that it’s a level playing field for everyone,” James said in an exchange with reporters Wednesday. “Some are paying right now, others aren’t. We need to make sure that there’s fairness for businesses.”
James brought up examples such as Crave, Apple TV and Amazon Prime as services where subscribers will have PST charged on their bills and this move “is about making sure that the tax system catches up with the reality of people today,” with online purchases.
With the move, B.C. joins Saskatchewan and Quebec as Canadian jurisdictions that have applied provincial sales taxes to such services and the Ministry of Finance noted that U.S. states including Florida, Pennsylvania and Washington also collect local sales taxes.
Kris Sims, the B.C. director of the Canadian Taxpayers Federation, criticized the tax change as adding to the measures “making our cost of living even more expensive, all while racking up more debt.”
In a follow-up tweet, to the proposition of putting Netflix on the same competitive footing as companies that do collect and remit PST, Sims suggested that “we stop taxing the other streaming services rather than beginning to tax Netflix too?”
Netflix, in a December filings to the U.S. Securities and Exchange Commission, revealed that it had 6.5 million Canadian subscribers as of Sept. 30, according to a report from The Canadian Press.
The filing also showed that the Los Gatos, Calif.-based company took in $780 million in revenue from those subscribers through the first nine months of 2019. In all of 2018, Canadians paid $835 million.
However, as a foreign digital service, it does not collect and remit GST, prompting a debate about the contributions it does or doesn’t make to the development of Canadian content.
In 2017, Netflix vowed to spend $500 million over five years on Canadian TV and film productions and said that by 2019 it had surpassed that figure.