The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

7 | The IFP -H alton H ills | T hursday,D ecem ber 17,2020 theifp.ca That Netflix tax is com- ing after all. The federal government is taking aim at digital gi- ants including Netflix, Am- azon and Airbnb, insisting they pay HST or GST on sales to Canadian consum- ers, a move that experts warn could raise prices. Everything from app- store purchases to stream- ing subscriptions to items purchased on Amazon could be hit under the new proposals, scheduled to be in force from July onwards. The news came as part of the federal government's fiscal update Monday. In a speech to the House of Commons, Finance Min- ister and Deputy Prime Minister Chrystia Free- land said it was a matter of fairness. "Canadians want a tax system that is fair, where everyone pays their fair share, so the government has the resources it needs to invest in people and keep our economy strong. That is why we are moving ahead with implementing GST/HST on multination- al digital giants, and limit- ing stock option deduc- tions in the largest compa- nies," Freeland said. A spokesperson for Net- flix pointed out that the streaming giant has been collecting and paying sales tax in Quebec and Sas- katchewan since 2019. "Netflix is committed to being a good partner to Canada and we will work collaboratively with the federal government on this issue, as we have previous- ly in Quebec and Saskatch- ewan," said the spokes- person. Google sounded a simi- lar tune. "While we are still re- viewing today's changes around GST/HST, we will work with the Government of Canada to comply with local tax law, as we do in ju- risdictions around the world. With respect to broader initiatives, we sup- port the movement toward a new comprehensive, in- ternational framework for how multinational compa- nies are taxed," said the emailed statement from Google. The country's biggest hotel trade group and a small-business lobby ap- plauded the levying of GST and HST for the digital gi- ants. "This levels the playing field. We've been asking for this for years," said Susie Grynol, president and CEO of the Hotel Association of Canada, regarding the de- cision targeting companies like Airbnb. Corinne Pohlmann, vice-president of national affairs for the Canadian Federation of Independent Business, said internation- al online retail giants like Amazon have had it too easy for too long. "There's a fundamental unfairness in online retail- ers not collecting and re- mitting HST/GST, while our members do," said Pohlmann. The government is also looking to apply a broader corporate tax on revenue generated in Canada by in- ternational technology gi- ants, including companies like Apple, Google and Facebook. "Canada will act unilat- erally, if necessary, Mr. Speaker, to apply a tax on large multinational digital corporations, so they pay their fair share just like any other company operat- ing in Canada," Freeland added. But corporations shift- ing money around to lower- tax jurisdictions isn't limit- ed to tech firms, meaning this measure doesn't go far enough, said David Mac- donald, chief economist at the Canadian Centre for Policy Alternatives. "Corporate tax shifting is hardly restricted to 'cor- porations providing digital services.' Those with any international operations can easily utilize corporate tax shifting to move their profits to low-tax jurisdic- tions while using top-notch Canadian infrastructure that they don't pay for," said Macdonald. In princi- ple, though, he liked the idea. The substance? Well, there wasn't much. "It is positive that, in the absence of any OECD agreement on corporate disclosure that would al- low for consistent interna- tional corporate taxation, the government is willing to act alone. The trouble is that this isn't a fleshed-out proposal, nor does it apply nearly as broadly as need- ed," said Macdonald. The move to collect GST and HST, says one veteran tech industry watcher, means prices will be going up. "Canadians will be pay- ing more for these services. Tell me one company who ever told a consumer 'yes, I'll pay that sales tax for you.' Prices are going up," said Michael Geist, the Canada Research Chair in Internet and E-Commerce Law at the University of Ot- tawa. The update specifically called for GST/HST to be paid by "foreign-based ven- dors selling digital prod- ucts or services to consum- ers in Canada" or through app stores, and on all sales facilitated by a digital plat- form of goods located in Ca- nadian fulfilment ware- houses, as well as on short- term accommodation ar- ranged through digital platforms. Geist says the call for a broader corporate tax on international tech compa- nies could cause friction with Canada's largest trad- ing partner. "If Canada, or Australia, or countries in Europe col- lect a corporate tax on these tech companies, that's going to mean less tax revenue for the U.S., and the Americans won't be happy about that," said Geist. OTTAWA TO IMPOSE 'FAIR SHARE' OF TAX ON DIGITAL GIANTS Everything from app store purchases to Netflix subscriptions to items purchased on Amazon could be hit under the new proposals. Pexels photo JOSH RUBIN josh@thestar.ca BUSINESS