This week, Canada’s Parliamentary Budget Officer (PBO) released the ‘Digital Services Tax’ report, which analyzes the tax implications of the government’s efforts to tax specific online companies.
The tax would target companies that offer services such as online marketplaces, advertising, media and user data services.
As currently proposed, companies with revenues exceeding $20 million would be subject to a tax equivalent to three per cent of their revenues.
This has raised concerns among industry experts and stakeholders. The main problem is that these costs will ultimately be passed on to Canadian users of these services.
For instance, many may remember the promise made by the Trudeau Liberal Government that they would not tax Netflix. However, when they decided to reverse that promise, the tax now appears on your monthly bill.
This digital service tax has the potential to generate an additional $7.2 billion from Canadians over the next five years. However, this comes when many Canadians struggle to afford groceries, rent or mortgage payments.
As these digital companies are predominantly American, discussions have arisen among elected officials in Congress who are increasingly advocating for retaliatory trade sanctions against Canada in response to the proposed digital services tax. Another concern is that some online companies may choose not to offer their services in Canada, similar to Meta’s (formerly Facebook) decision to no longer allow the sharing of Canadian news content on their social media platform in response to Trudeau’s Bill C-18.
Many small independent news organizations have pointed out that this situation has adversely affected them. During the devastating August wildfires, it was frustrating for many citizens to be unable to share crucial online news information with their family, friends, and neighbours.
This frustration was amplified because much of the most relevant local media content came from small local media organizations.
The Trudeau Liberal government defends the digital services tax to ensure that large online companies pay their “fair share.”
That leads to my question for this week: will Canadians likely be the ones who pay the digital services tax? Do you support it?
I can be reached at Dan.Albas@parl.gc.ca or by calling toll-free at 1-800-665-8711.
– Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola and the Co-Chair of the Standing Joint Committee for the Scrutiny of Regulations.