The series on digital tax issues concludes with the most conventional tax issue: how to ensure that large corporations pay their fair share of income tax for profits generated in Canada (series posts on digital sales tax, Netflix tax, Internet access taxes, digital device taxes, and tax in support of newspapers). The income tax issue was raised by the NDP earlier this year, who called on the government to ensure that Internet companies pay taxes on profits made in Canada.
Post Tagged with: "digital tax"
Making Sense of the Canadian Digital Tax Debate, Part 6: Ensuring Internet Companies Pay Their Fair Share of Income Tax
Making Sense of the Canadian Digital Tax Debate, Part 5: Income Tax Reform to Support the News Media
The series on digital tax policy issues has touched on various tax measures that target consumers: digital sales tax, Netflix tax, Internet access taxes, and digital device taxes. The series returns with a post examining a business-focused tax proposal, namely lobbying efforts to amend the Income Tax Act to change the rules on advertising deductions in the hope of shifting ad spending to Canadian media organizations.
A potential Netflix tax may garner the lion share of media attention, but the more harmful tax proposal comes from those advocating for a tax on Internet service providers that would have a real impact on all Internet use (earlier posts in the series include digital sales tax and Netflix tax). As far back as 1998, the CRTC conducted hearings on “new media” in which groups argued that the dial-up Internet was little different than conventional broadcasting and should be regulated and taxed as such. In other words, groups have been arguing for new Internet taxes since before Google, Facebook, or Netflix.
Making Sense of the Canadian Digital Tax Debate, Part 2: Mandated Canadian Content Contributions aka a “Netflix Tax”
The series on the Canadian digital tax debate continues with an examination of calls for mandated contributions by Internet video services to support the creation of Canadian content, frequently referred to as a “Netflix tax” (earlier post on digital sales tax). The Netflix tax is perhaps the most politicized digital tax issue, with both the Conservatives and Liberals opposing such a tax during the last federal election. Despite the opposition, the issue continues to resurface as it is regularly raised by cultural groups and was part of the CRTC’s report on the future of broadcast regulation released in the spring.
Proponents of a mandated Netflix contribution typically rely on three arguments: (i) failure to impose fees and regulation on foreign providers represents an “existential threat” to Canadian creative industries since they argue it will lead to reduced spending on production in Canada; (ii) there is a need to “level playing field” for Canadian services competing against foreign providers; and (iii) Europe is moving toward Netflix regulation and Canada should too.