Last week, I posted on the results of this summer’s online harms consultation, which remains shrouded in secrecy as the Canadian government still refuses to disclose the hundreds of submissions it received. That post focused on the common concerns raised in the submissions as pulled from my ongoing blog post that features links to dozens of submissions that have been independently posted. This second post highlights frequently cited recommendations. These recommendations are particularly important given that the mandate letter for Canadian Heritage Minister Pablo Rodriguez indicates that any online harms legislation “should be reflective of the feedback received during the recent consultations.”
The past year has been an incredibly active one for Canadian digital law and policy with legislative battles over Bill C-10, controversial consultations on online harms and copyright, important Supreme Court decisions, new digital taxes, and an emerging trade battle with the United States. For this final Law Bytes podcast of 2021, I go solo without a guest to talk about the most significant trends and developments in Canadian digital policy from the past year and to think a bit about what may lie ahead next year.
The Canadian government’s decision to move ahead with the Digital Services Tax Act, legislation that will take effect in 2024 should the international agreement at the OECD fail to materialize by that date, is problematic for reasons that extend beyond sparking a trade battle with the United States and potentially leading to billions in tariffs on Canadian goods and services. The plan also appears to violate Canada’s commitment at the OECD, in which all members agreed to a moratorium on introducing new digital services taxes.
Should Have Seen This Coming: U.S. Raises Prospect of Retaliation Over Canada’s Digital Services Tax Plans
For the past two years, Canadian digital tax policy has been on a collision course with Canadian trade policy. The Liberal government committed in the 2019 election campaign to a digital services tax primarily designed to target large U.S. technology companies that generate significant revenues in Canada from online advertising and user data. The policy has been adopted in several other countries, repeatedly sparking a response from the U.S. that threatens to retaliate with tariffs on sensitive sectors of the economy. For example, after France announced plans for a similar tax, the U.S. threatened to levy billions in tariffs on French products.
As the trade threats escalate, the effort to strike an international agreement on the issue has gained increasing traction (my Law Bytes podcast last February with Professor Itai Grinberg provides a great backgrounder into the issue). After a preliminary deal was struck in October on an international approach, the U.S. dropped the tariff threat against several countries. Yet as efforts to finalize and implement the deal continue, Canadian Finance Minister Chrystia Freeland announced this week that new legislation will be introduced to create a Canadian digital services tax (this is distinct from digital sales taxes, which are currently in effect).
The results of this summer’s online harms consultation remains largely shrouded in secrecy as the Canadian government still refuses to disclose the hundreds of submissions it received. Canadian Heritage Minister Pablo Rodriguez now leads the file, but he has said little about his department’s plans or explained why a public consultation should not feature public availability of the submissions. I have maintained an ongoing blog post with links to dozens of submissions that have been independently posted. While even a cursory review reveals widespread criticism, I’ve worked with the University of Ottawa law student Pelle Berends to do a deeper dive on the available submissions. This first post identifies the common concerns raised in the submissions with a chart breaking down the positions posted below. A second post will highlight frequently raised recommendations.