The CRTC’s decision to require registration for a wide range of Internet sites and services that meet a $10 million revenue threshold, including podcasters, adult sites, and news sites, appears to have taken many Canadians by surprise. For anyone who closely followed Bill C-11, this was entirely expected given that the bill adopts an approach in which all audio and video content anywhere in the world is subject to Canada’s Broadcasting Act. I listed many of the sites that are now caught by the regulations back in 2021 based on an internal Heritage memo that identified many that no one would reasonably describe as web giants. In other words, this isn’t an outlier. Rather, it is how the government crafted the law with a “regulate everything” default and the expectation that the CRTC would establish some exemptions. But even if most Canadians were only vaguely aware of the exceptionally broad scope of Bill C-11, they might still have missed the regulatory process that led the CRTC to establish the $10 million threshold and acknowledge that this is the first step in a bigger regulatory plan. That is because the Commission intentionally limited public participation and rejected efforts to extend the timeline for submissions on the grounds that the issue was “industry focused and relatively narrow in scope.”
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Limiting Public Participation: Why No One Should Be Surprised at the CRTC’s Internet Services Registration Requirement Ruling
Last week, the CRTC issued the first two of what are likely to be at least a dozen decisions involving the Online Streaming Act. Those decisions are already sparking controversy, but as the Commission focuses on Bill C-11 and perhaps soon Bill C-18, there is mounting concern that its other responsibilities are falling by the wayside that its independence from the government is starting to show cracks. Peter Menzies is a former Vice-Chair of the CRTC and frequently commentator on broadcast, telecom and Internet regulatory issues. He joins the Law Bytes podcast to talk about the current state of the Commission, which has never seemed more important but also seemed more out of touch and incapable of meeting its duties.
I need to start this post by making it clear that I am a supporter of publicly funded broadcasting and the CBC. With the increased use of paywalls and dramatic shifts in the media landscape, there is value in a public broadcaster that fills the gaps in the privately owned media world by ensuring that all Canadians have open, freely available access to reliable news. That requires embracing all forms of distribution, maintaining steadfast independence, and limiting direct competitive overlap with the private side that is currently facing significant digital transition challenges. This should be an easy value proposition for the CBC and one that would provide a compelling case for public funding. Yet the CBC’s approach to Bill C-18 and other government digital policies seems determined to do the opposite and, in doing so, threatens its future support.
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 Law Bytes Podcast, Episode 176: A Mid-Summer Update on Bills C-11, C-18, the Government’s Cabinet Shuffle, and the Brewing Battle over Digital Taxes
Coming off a week in which the government engineered a major cabinet overhaul that saw Heritage Minister Pablo Rodriguez replaced by Pascale St-Onge, an escalation of the battle over digital services taxes, and which featured significant news on both the Bill C-11 and Bill C-18 fronts, this week’s Law Bytes podcast provides a mid-summer update on recent developments. Barring some urgent news, the podcast will be taking a break in August and return in September.