Ottawa urged to tax e-commerce giants to help small businesses

OTTAWA — A Liberal-dominated House of Commons committee is calling on the Trudeau government to make internet giants such as Netflix collect and remit sales taxes on 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 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.”

“E-commerce creates the potential for even the smallest local firm to sell globally and, in so doing, creates an environment in which the benefits of trade can be shared by all Canadian firms, and not accrue to just large multinational firms,” the report says.

The message is sure to resonate with corners of the Liberal caucus, particularly those from Quebec, who have been pressed by constituents about their party’s opposition to forcing companies such as Netflix to collect and remit federal sales tax. 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.