Warning sign of 'Taxes Ahead' by EFile989 http://www.efile.com/ (CC BY-SA 2.0) https://flic.kr/p/mnkQsH

Warning sign of 'Taxes Ahead' by EFile989 http://www.efile.com/ (CC BY-SA 2.0) https://flic.kr/p/mnkQsH


“Get Money from Web Giants” Grows: Canadian Heritage Minister Guilbeault Says Government Working on a New Data Tax

Canadian Heritage Minister Steven Guilbeault has said that his top legislative priority is to “get money from web giants.” That approach has typically been taken to mean the introduction of digital sales taxes and mandated Cancon payments from Internet streaming services such as Netflix. More recently, Guilbeault has raised the possibility of a link tax or licence, which would be paid by companies such as Facebook or Google merely for linking to news articles. If that wasn’t a sufficiently large digital tax agenda, Guilbeault now says the government is also planning new taxes on data and online advertising. Guilbeault told Evan Solomon:

Guilbeault: We had also made a commitment in the last election in our platform to impose two other taxes. One on the use of data and the other on ad buys. And we are, with the new finance minister, this is something that her and I are working on. There is more work to be done on that, but this is something we want to move forward on.

Solomon: Is that going to make when I purchase a streaming service like Netflix or I sign up for a service that requires payment, will that make it more expensive? That’s what people want to know. Will your tax be passed on to me?

Guilbeault: It’s really up to those companies to decide how they do this. But every company in Canada is paying the GST. I don’t see why we should make an exception with some of the most wealthiest companies in the world.

Solomon: No, I’m talking about the data and the ad buy tax.

Guilbeault: These are things we need to look at with the Finance Minister and the Finance Ministry how we could go about doing that. But you know what they say Evan, “data is the new oil.” Isn’t it interesting that when you go and you surf the web – I’m a jogger so I’ll go and look for jogging shoes on the website of a company and then I come on my Facebook page and all of a sudden there is a whole bunch of publicity for jogging shoes. Why is that? Because Facebook sold information to companies without my permission – you’re not asked about that – they’re making a profit out of my personal information. We think there needs to be some fiscal framework around that because right now there is none.

As I noted in this tweet stream, the entire Guilbeault interview raises troubling questions as he misstates the law on fair dealing/fair use, incorrectly describes how Facebook uses personal information and displays content, and inaccurately suggests that companies pay GST (consumers pay GST, companies collect and remit it). But it is his comments on two new taxes – a data tax and an online advertising tax as a response to profiting from personal information – that should ring alarm bells.

Guilbeault told Solomon that the 2019 Liberal Platform included a commitment to introducing the two new taxes. The platform actually states that the Liberals will:

make sure that multinational tech giants pay corporate tax on the revenue they generate in Canada. We will also work to achieve the standard set by the Organisation for Economic Co-operation and Development (OECD) to ensure that international digital corporations whose products are consumed in Canada collect and remit the same level of sales taxation as Canadian digital corporations

Since the election, the government has flip flopped on this commitment. Rather than seeking a standard on sales tax at the OECD (as indicated in the platform), the government now says it will move ahead with the digital sales tax and seek international consensus on multinational technology companies paying corporate tax on the revenue they generate in Canada.

Regardless, the platform did not specify plans for a data tax or an advertising tax. It is likely that Guilbeault is thinking of the Parliamentary Budget Office document that references taxes on advertising services and digital intermediation services, but does not include a specific reference to a data tax. A similar approach in France has been delayed with the U.S. threatening billions of dollars in tariffs in response. Canada would face the same fate and the prospect of retaliation under the USMCA. But even if that is the source, the plan was to work with the international community to develop a global standard, not develop a domestic approach. Further, what does this have to do with the Minister of Canadian Heritage? Tax policy is the responsibility of the Minister of Finance and privacy falls to the Minister of Innovation, Science and Industry, yet Guilbeault says a data tax is something “her and I are working on.”

Beyond the failure to include any reference to a data tax in its 85 page platform, the proposal is ill-advised and runs counter to the platform’s commitment to enhance privacy rights. Guilbeault mistakenly describes how Facebook uses personal information (it does not sell personal information to other companies without permission) to argue that some form of tax is needed. Yet rather than beefing up Canada’s privacy laws, the government effectively seeks to take a cut of the revenues that come from using Canadians’ personal information. Canadians don’t need yet another party profiting from their personal information. They need stronger privacy rules that limit the collection, use and disclosure of their information. In his zeal to “get money from web giants”, Guilbeault apparently seems to think that even a tax cash grab derived from Canadians’ data is fair game.