Prime Minister Justin Trudeau is rejecting suggestions his government should have moved to tax foreign web giants in his recent budget, saying he doesn’t want to hurt Canadian taxpayers.
He said Thursday he won’t do anything that could cause Canadians to pay more for cellphone or internet service.
“We’re not going to increase the cost of internet service, we’re not going to impose more taxes on Quebecers, on taxpayers,” he said during a visit to a Montreal community organization to promote this week’s federal budget.
“It’s a promise that we made.”
Some union and business leaders as well as the NDP have said it’s unfair that Canadian companies are faced with more taxes and regulations than foreign digital companies such as Netflix and Google.
Some have criticized the government for failing to take action in the budget to address what they say is an uneven playing field.
The Canadian Union of Public Employees criticized the budget for “maintaining a tax bias that hurts Canadian businesses,” particularly in the cultural sector.
Canadian media being ‘severely damaged’
“Canada’s media and cultural industries are being severely damaged by the tax loopholes that benefit foreign digital companies and platforms at the expense of Canadian producers and workers and that cost the federal government at least $1 billion in revenues,” the union wrote in a statement on its website.
“CUPE has called for the government to require digital giants like Uber, Google and Facebook to collect and remit sales tax like any other business, but Budget 2018 is silent on the matter.”
Pierre Karl Peladeau, president of media giant Quebecor Inc., also issued a statement accusing the government of “choosing to turn its back on our businesses and court foreign online giants instead.”
The issue has been particularly heated in Quebec, where there has been vocal criticism of the Liberals’ 2017 agreement with Netflix, which allows the U.S. web-streaming giant to forgo paying sales tax by investing $500 million in Canadian productions over the next five years.
Quebec’s political parties voted unanimously last fall in favour of a motion to impose the Quebec sales tax “as soon as possible” on foreign companies that offer products and services online, notably in the cultural sector.
‘Rigged’ tax system
NDP Leader Jagmeet Singh devoted part of his speech at the party’s recent national convention to criticizing the “secret deal” with Netflix, as well as a “rigged tax system that benefits the ultra-rich” by allowing foreign web giants to avoid paying the same taxes as Canadian businesses.
On Thursday, Trudeau acknowledged the rise in online sales but repeated his government’s position that imposing the sales tax on foreign digital platforms would amount to a tax on middle-class Canadians.
“We recognize that online international commerce is gaining momentum,” he said. “That’s why we invested $25 million in Statistics Canada to better understand the options and possibilities.”
When asked if the tax disparity was fair to Canadian companies, Trudeau responded that his government’s first concern is for citizens.