Mon. Feb 26th, 2024

Is Ottawa tiptoeing to avoid offending the American government?

No “Netflix tax” January as promised

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GAFA (Google, Amazon, Facebook and Apple) are among the web giants that could be taxed by the Canadian government.

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Federal Finance Minister Chrystia Freeland had promised that her digital services tax (DST) would apply “starting January 1, 2024,” but it will not be ready as planned in the new year.< /p>

Minister Freeland has been promising for two years that Ottawa will tax the income of international digital companies (like Amazon, Uber, Airbnb or Netflix) that make business here, but who pay their taxes elsewhere.

In fact, this tax was to come into force on January 1, 2022. However, Canada subsequently agreed to suspend this measure for two years, while an international tax is put in place, in collaboration with other countries , including the United States, where several digital giants are located.

However, the deadline of January 1 cannot be met , since the bill which allows the implementation of this tax has still not been adopted in the House of Commons.

It's unacceptable that the Liberals are not delivering on their own promise, says NDP MP Niki Ashton.

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These Companies like Uber, Airbnb, Amazon are making huge profits and are not paying the taxes they need in Canada.

A quote from Niki Ashton, NDP MP for Churchill—Keewatinook Aski< /blockquote>

The 3% Canadian DST would hit web giants that have revenues associated with Canadian users of at least $20 million. The tax could generate $7 billion in revenue over five years, according to the Parliamentary Budget Officer. The idea is to ensure that these digital giants pay their fair share for the profits they make in Canada.

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With the purchase of Instagram and WhatsApp, Facebook and Mark Zuckerberg are leading the way in the digital world.

< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">The Bloc and New Democrat opposition deplores the fact that the January 2024 deadline imposed by the Liberals will not be respected. The Trudeau government assures that it has not changed its mind and still wishes to move forward with the TSN.

The Bloc Québécois asks why the government did not act more quickly, in particular to ensure that the date of January 1, 2024 is respected.

It’s as if Canada is tiptoeing forward, so as not to offend the United States. We should have imposed tax rules on these companies a long time ago.

A quote from Martin Champoux, Bloc Québécois MP

The The United States is fiercely opposed to the imposition of an international DST, as called for by Canada and OECD countries. The tax envisaged by this group of countries could reach up to 15% of the profits that the digital giants make in each of the affected countries.

Negotiations have been underway for two years and were expected to conclude in December 2023. However, US Treasury Secretary Janet Yellen indicated that details remained to be settled before the treaty is signed.

This resistance from the Americans and the delay in negotiations put Canada and other OECD countries in a difficult position, which could lead to trade retaliation from the United States.

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The digital services tax was not the subject of discussions between United States President Joe Biden and Prime Minister Justin Trudeau, according to the latter.

Many countries, such as France, Austria, India, Italy, Spain and the United Kingdom, have already implemented their own digital services taxes.< /p>

The Americans have committed to these countries not to impose retaliatory measures during the negotiations on the imposition of an international DST. An exemption which expires on December 31.

Members of the Biden administration, such as the United States ambassador to Canada, David Cohen, have been suggesting for months that a unilateral gesture by Ottawa could have harmful consequences on trade relations between the two countries and that retaliatory measures could follow.

Not to mention the political context as the campaign for the US presidential election in November 2024 begins. in motion and that the renegotiation of CUSMA with the United States is fast approaching.

There is a hesitation in the Trudeau government, because we want to avoid stepping on the American big toe, believes Bloc MP Martin Champoux.

For its part, the New Democratic Party (NDP) believes it is a mistake to delay the coming into force of the digital services tax.

Canadians deserve fairness in taxes, believes MP Niki Ashton. According to her, this involves a tax on digital services so that the richest, like these web giants, pay their fair share.

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Deputy Prime Minister and Minister of Finance, Chrystia Freeland, at a press conference in Ottawa.

Minister Chrystia Freeland's office denies that it is giving in to American demands. Our position has not changed, writes his press secretary, Katherine Cuplinskas.

A multilateral agreement has always been Canada's priority and preference, she says. The government will move forward with its own digital services tax if a global deal is not reached.

L The implementation of this tax is included in the Latest Economic Statement Implementation Bill, which is expected to be passed later in 2024.

The bill gives Minister Freeland the flexibility to unilaterally change the terms of the TSN without going through Parliament. For example, the government could now change the tax rate or eliminate the retroactivity of the TSN by decree rather than by legislation.

In the Commons , only the Conservative Party is opposed to the implementation of a new tax on digital services. The last thing Canadians need is a new tax that would jeopardize our trade with our main economic partner, says Conservative MP Kyle Seeback.

For its part, the Bloc Québécois demands that the Trudeau government clearly commit to using the revenue generated by this new TSN to help Quebec and Canadian businesses.

The money collected must be directly distributed to affected businesses, such as those in the retail sector, demands MP Martin Champoux.

It's a sector hard hit by online commerce, he continues. We must help them take the digital shift so that our businesses can be competitive.

With the collaboration of Marie Chabot-Johnson

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