The federal government has quietly backed down from its plans to implement a new digital services tax as of January 2024 that the Parliamentary Budget Officer estimated would generate billions in revenue. It did not make the headlines or receive much promotion, but after months of insisting that a digital services tax would take effect in Canada in January 2024, the government has now removed that implementation deadline in the Fall Economic Statement. The battle over the proposed tax had sparked increasing anger between Canada and the U.S., with dozens of U.S. Senators and Representatives signing letters urging the government to delay its plans. The Canadian plan remains to establish a retroactive three percent tax that will hit a wide range of businesses, but given fears moving ahead now would jeopardize a global agreement that is designed to address the digital services tax issue, Canada has seemingly faced the obvious reality and backed down.
Post Tagged with: "freeland"
Bill C-18 Bailout: Government Announces Plans to Pay For 35% of Journalist Costs for News Outlets as It More Than Doubles Tax Credit Per Employee
The government has taken the first step to creating a bailout for its disastrous Bill C-18 by agreeing to News Media Canada demands to increase the support under the Labour Journalism Tax Credit. While the current system covers 25% of the journalist costs up to $55,000 per employee (or $13,750), the government’s fall economic statement increases both the percentage covered and cap per employee. Under the new system, which is retroactive to the start of this year, Qualified Canadian Journalism Organizations (which covers print and digital but not broadcasters) can now claim 35% of the costs of journalist expenditures up to $85,000 per employee. The increases the support to up to $29,750 per employee or an increase of 116%. This new support will run for four years at a cost of $129 million ($60 million this year alone).
It’s Complicated: Unpacking the Risks Behind Canada’s Digital Services Tax Plan
The Canadian government released a detailed document last week outlining the specifics behind its draft Digital Services Tax Act. No actual legislation has yet been passed, but the government is providing guidance on how the potential law would be interpreted assuming it takes effect next year. The document has sparked criticism from business groups and the U.S. government given that it envisions a retroactive three percent tax that will hit a wide range of businesses. Further, the Canadian plan is facing significant opposition from many OECD countries since it may jeopardize a global agreement that is designed to address the digital services tax issue. While the digital services tax (DST) is typically framed as a tax on big tech, the reality is that the Canadian version extends far beyond just companies such as Google and Facebook, potentially including major Canadian retailers such as Canadian Tire, Loblaws, and others.
My view is that unlike Bills C-11 and C-18, which create cross-industry subsidy models funded by tech companies to support government policy, appropriate taxation models is the far better approach to ensure that companies “pay their fair share”. While a DST may be a good approach (particularly if part of a global system), the Canadian plan to implement the tax retroactively next year creates some significant risks. In fact, our current approach raises the prospect of U.S. tariff retaliation, opposition from many allies at the OECD, and expanded news link blocking in response to Bill C-18.
The Dongle Budget: What Prioritizing a Common Cell Phone Charging Port Says About Canadian Digital Policy
Deputy Prime Minister and Finance Minister Chrystia Freeland released the government’s 2023 budget yesterday with a raft of new spending initiatives and subsidies for “clean tech” to match developments in the United States. Budgets have become policy mapping documents where the government identifies its priorities for the coming year, often accompanied by plans to incorporate them into the Budget Implementation Act, where they are virtually guaranteed to pass with limited Parliamentary overview and debate. I’ll identify some of the most notable developments below, but want to focus on a commitment to establish a standard charging port in Canada which I think is emblematic of a government that has increasingly lost the plot on digital policy.
The Canadian Government Makes its Choice: Implementation of Copyright Term Extension Without Mitigating Against the Harms
The Canadian government plans to extend the term of copyright from the international standard of life of the author plus 50 years to life plus 70 years without mitigation measures that would have reduced the harms and burden of the extension. The Budget Implementation Act, a 443 page bill that adopts the omnibus approach the government had pledged to reject, was posted late yesterday by Finance Minister Chrystia Freeland’s department and could be tabled in the House of Commons as early as today. Page 328 of the bill features the shoehorned amendments to the Copyright Act, including an extension of the term of copyright. While the government is not making the change retroactive (meaning works currently in the public domain stay there), no one seriously expected that to happen. What many had hoped – based on the government’s own committee recommendations and copyright consultation – was to introduce mitigation measures to reduce the economic cost and cultural harm that comes from term extension. Instead, Freeland, Prime Minister Justin Trudeau, Innovation, Science and Industry Minister François-Philippe Champagne, and Canadian Heritage Minister Pablo Rodriguez have chosen to reject the recommendations of students, teachers, universities, librarians, IP experts, and their own Justice Minister.
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