Uber charge may lead to ‘Netflix tax’ on streaming

TORONTO The federal government’s decision to slap sales taxes on ride-sharing services like Uber may pave the way for sales taxes on digital services like Netflix, industry watchers say.

Just don’t expect it to happen as quickly, given ongoing attempts to create common global standards for taxing digital services and confusion over exactly what Canadian politicians mean when they say “Netflix tax.”

The tax on Uber — the 2017 budget included amending tax rules to ensure ride-sharing companies pay the same GST and HST as taxis “to level the playing field” — indicates the government may extend sales taxes to video or audio-streaming services like Netflix or Spotify, said Michael Geist, Canada Research Chair in Internet and Ecommerce Law at the University of Ottawa.

Although Uber may describe itself as an app or digital service, there wasn’t a compelling argument against a sales tax since its drivers provide a physical service in Canada, Geist said in an interview.

“No one likes paying extra sales taxes, but I think we can understand why the government would adopt that policy,” he said.

Consumer advocacy group OpenMedia agrees.

The group called implementing a sales tax a “sensible alternative” that most consumers would understand.

“It’s infinitely preferable to a monthly tax on peoples’ Internet bills or a tax that would target Netflix or other online delivery platforms,” OpenMedia’s David Christopher said.

But it will be more complicated to implement given the variety of online services to which a sales tax might apply.