Newly released documents show that federal officials in Ottawa struggled to come up with ways to have online streaming services such as Netflix and Amazon pay sales taxes before abandoning the idea as they felt it would generate too much negative publicity.
Briefing notes provided to federal Heritage Minister Melanie Joly in 2017 detail how certain governments around the world have required foreign-based streaming services such as Netflix to register with the government in order to collect and pay sales tax, rather than imposing new taxes on the services. The notes were obtained by The Canadian Press under the Access to Information Act.
In the federal materials, bureaucrats say that countries such as Canada should make it as simple as possible for companies to register with national tax offices and collect revenue they are currently missing out on. Quebec’s provincial government announced in its budget on Tuesday of this week that it would do exactly that. Starting in September, Quebec will apply provincial sales tax on Netflix and other foreign based streaming services operating in the province. Quebec also plans to apply sales tax on all purchases made online through Amazon.
Prime Minister Justin Trudeau killed the idea of increasing taxes, or applying sales tax, on online service subscriptions, saying the move would not be popular with Canadian voters. The cost of Netflix subscriptions have gone up in countries such as Japan and Australia after sales tax was applied to the streaming service in those jurisdictions.
