National Post (National Edition)
CRTC head muses on Netflix’ GST exemption
‘A bit surprised’
The head of Canada’s broadcast regulator is surprised Canada hasn’t slapped a sales tax on foreign video streaming services like Netflix, a move the Liberal government seems to be inching towards despite previous promises not to do so.
Canadian Radio-television and Telecommunica- tions Commission chairman Jean-Pierre Blais remarked on the controversial Netflix tax Thursday during questioning at the Standing Committee on Canadian Heritage hearings on the future of local media in Ottawa.
Liberal MP Hedy Fry asked Blais to respond to previous assertions made to the committee by “all the telecoms” that they’re at a disadvantage when it comes to producing Canadian content because they have to pay GST on their services while Netflix doesn’t.
WE PROVIDED (CARRIERS) WITH A BIT OF A LEG UP.
“I can see their argument,” Blais said, referring to Videotron Inc.’s Illico, BCE Inc.’s CraveTV and soon-to-be shuttered Shomi, the failed joint venture between Rogers Communications Inc. and Shaw Communications Inc.
“(They) are subject to GST payments, whereas other foreign services that still use our banking system through credit card set-offs don’t seem to be,” Blais said. “Just as an ordinary citizen I’m a bit surprised by that; I know it’s not the approach taken in other jurisdictions.”
Blais, who was grilled on how to deliver local news and Canadian content in a digital age, has pursued a consumer-focused agenda at the helm of the CRTC. When the Conservatives were in power — they were adamantly opposed to a Netflix tax — the regulator did not heed calls from broadcasters who suggested a levy requiring foreign streaming services to pay into a fund that supports Canadian content.
The CRTC did, however, loosen up regulations for Canadian streaming services such as Shomi and CraveTV competing against Netflix. It ruled they wouldn’t have to pay into the fund as long as they made their services available over any Internet connection.
“Broadcasters came to us in our hearing and com- plained and indicated they were competing with one hand tied behind their back with respect to digital products … we provided them with a bit of a leg up,” the CRTC’s executive director of broadcasting Scott Hutton told the committee.
But the CRTC does not control fiscal policy and thus has no role in deciding whether Netflix should collect and remit sales tax, he said.
Heritage Minister Mélanie Joly has repeatedly promised there will be no Netflix tax under the Liberal government.
But it seems the Liberals might not consider GST a Netflix tax. In an interview with CTV this week, Joly said she would “of course” talk to the Finance Minister Bill Morneau about a sales tax, suggesting it is under his purview, not hers.
While the committee may pass the buck on a Netflix tax to a different department, the review of local media and cultural policy continues.
Blais said there is still money in the broadcasting system to support local news through licensing conditions on television broadcasters. Major broadcasters must go through public hearings to get their licences renewed in November.
Blais also stressed how important local programming is to Canadians, even though approximately five million have Netflix subscriptions.
“Just because someone is watching Netflix doesn’t mean he’s not consuming other products, as well,” he said.