The public policy battle over a digital sales tax to cover services such as Netflix continues in Canada with the introduction last week of a Quebec private members bill that would require the collection and remission of provincial sales tax by “persons with a significant online presence.” I’ve already written extensively about the longstanding policy work on digital sales taxes, the misleading claims about a level playing field, and how Canadian subscribers can pay the sales tax on Netflix today if they so choose. While there is an inevitably about digital sales taxes – it will come once global standards are sorted out – some still want the tax now without much regard for the challenges of implementation.
Post Tagged with: "netflix"
Quebec Digital Sales Tax Bill Demonstrates the Complications That Come With Implementing a “Netflix Tax”
Think There Should be a Netflix Tax?: Why There is Nothing Stopping Canadian Subscribers From Paying Today
The ongoing furor over Netflix taxes remains one of oddest and most poorly understood public policy debates in recent memory. Part of the problem is that a “Netflix tax” has long been used to mean different things to different people. When first raised by the Conservative government, the issue had nothing to do with sales tax. Rather, a “Netflix tax” was a reference to a mandated contribution to help fund Canadian content, a position supported by various cultural groups and some provincial governments. The no-Netflix tax position took hold, however, and all three major parties adopted the position that they would not mandate contributions from online service providers such as Netflix.
More recently, the debate has shifted to Netflix tax as a sales tax with the goal of creating a “level playing field.” I tried to debunk the level playing field claims in this post and on Canadaland, but the claims of the need for a level playing field and sales tax continues. Yesterday, the NDP stated:
Canadian Heritage Minister Melanie Joly’s plan for digital Cancon has attracted considerable criticism, particularly the Netflix commitment to spend $500 million on productions in Canada over the next five years. Companies and commentators have argued that the deal creates an “uneven playing field”, noting that Netflix faces different obligations than Canadian companies for both tax collection and contributions to creating Canadian content. In both cases, however, the uneven playing field argument in favour of Netflix does not withstand even mild scrutiny.
Joly’s Digital Cancon Plan: Netflix May Be The Star, But No New Regulations, Taxes or Bailouts is the Story
Canadian Heritage Minister Mélanie Joly presented her vision for digital Cancon earlier today, delivering a wide ranging plan that included previously leaked information about a commitment from Netflix to spend $500 million over five years on production in Canada. The Netflix commitment is the headline of the day, though earlier reports inaccurately claimed that the funding would be for Canadian content rather than productions in Canada (the two are not the same given the restrictive approach to Cancon definitions).
The agreement represents a major long-term commitment to the Canadian market which should go some way to appeasing critics who feared that the company might abandon Canadian production in the future. However, since Canada was already one of the company’s top three countries for production, it may not result in a significant increase in funding.
Canadian Heritage Minister Melanie Joly announced via Twitter yesterday that the government has asked the CRTC to reconsider its TV licensing decision from earlier this year that established a uniform broadcaster spending requirement of 5 percent on programs of national interest (PNI, which includes dramas, documentaries, some children’s programming, and some award shows). The decision, which would lead to a reduction of mandated spending for some broadcasters, sparked a strong lobbying campaign from various cultural groups who claimed the decision would result in hundreds of millions in reduced spending on Canadian content. While the government’s decision should not come as a surprise – siding with the creator groups against the CRTC makes political sense – no one should confuse it with good policy. Indeed, the reality is that the CRTC’s belief that the digital market would create the right incentives for investment is increasingly borne out by recent developments that suggest Canadian broadcasters have few alternatives other than to develop their own original programming.