Yesterday’s federal budget included plans to amend the law to ensure that GST/HST is applicable to ride sharing services such as Uber. The budget states that the government will:

Amend the definition of a taxi business under the Excise Tax Act to level the playing field and ensure that ride-sharing businesses are subject to the same GST/HST rules as taxis.

This change should not be particularly controversial. No one likes paying taxes, but equal application of sales taxes ensures appropriate revenue collection and a level-playing field for all businesses in the sector. As I noted in an earlier post, I expect that this is a first step toward extending requirements to collect and remit sales taxes on foreign digital services such as Netflix and Spotify.  Applying sales taxes to all foreign digital services is complicated – there needs to be thresholds implemented to ensure that administrative costs do not outweigh revenues collected – but Uber is well established in Canada with many local jurisdictions establishing a regulatory framework for the service.

Moreover, Uber already collects and remits sales taxes in some Canadian jurisdictions. For example, the Uber page for drivers in Montreal explains that drivers are required to obtain sales tax registration numbers. It adds:

After you have provided your tax numbers, Uber will collect and pay the sales tax (GST and QST) for every trip on your behalf. However, you will need to report your sales tax once per year.

In fact, Uber promotes the sales tax collection by promising drivers a six percent rebate on the sales tax collected to account for offsetting business expenses. In other words, Uber promotes sales tax collection as a benefit to drivers in Montreal. When sales tax questions have been raised elsewhere, Uber has also claimed that drivers are expected to collect GST/HST (which is totally unrealistic given that it uses cashless transactions).

Given its position on sales taxes in Montreal, Uber might have welcomed the announcement in yesterday’s budget. However, it is apparently opposed, implausibly claiming that it is a “tax on innovation.” The company states:

This new tax on innovation would hurt over a million Canadians who use ridesharing to earn income and get around their cities.

It continues by claiming that Uber doesn’t even compete with taxis. Rather, it says its competition is with car ownership and that the tax will make Uber less price competitive with buying a car (last time I checked, cars were subject to sales taxes). Uber has enough regulatory fights on its hands. It doesn’t need another one based on weak claims about innovation that are directly contradicted by its own business practices in one of Canada’s largest cities.