(Ottawa) Finance Minister Chrystia Freeland is confident she can reach a “win-win solution” with the United States in the dispute over a tax on web giants like Amazon, Google, Apple and Meta. The Office of the U.S. Trade Representative said Tuesday it will work to end the recently enacted 3% digital services tax.
“Canada has already started and will continue to have bilateral negotiations with the United States. I am convinced that a win-win solution is absolutely possible,” she answered questions from the media on Thursday.
The Trudeau government had agreed to postpone the implementation of this measure, which had been announced in the 2021 budget, by two years in the hope that negotiations for the reform of the taxation of countries in the Organisation for Economic Co-operation and Development (OECD) would be successful. The tax on web giants constitutes pillar 1 of this reform.
Negotiations are still not concluded “and it is simply not reasonable or fair for Canada to suspend its own measures indefinitely,” Mr.me Freeland.
PHOTO DOMINICK GRAVEL, LA PRESSE ARCHIVES
Chrystia Freeland, Minister of Finance of Canada
“I think it’s also important for Canadians to understand that a number of other countries have had a digital services tax in place for a number of years without retaliation,” she also stressed. “These countries include our G7 allies and partners: the United Kingdom, France and Italy. And as Canada’s Minister of Finance and Deputy Prime Minister of Canada, I cannot accept that Canada is permanently in a discriminatory position.”
This would be contrary to the national interest, she added.
The government no longer wants to do without these revenues estimated at more than 7 billion over five years by the parliamentary budget officer despite American threats. The Canadian Press reported Tuesday that an official from the Office of the American Trade Representative was open to using all the tools at his disposal to end the Canadian tax that came into effect on June 28 following an order approved by the Trudeau Cabinet. The pressure on the American government is strong from this industry.
The Canadian Chamber of Commerce and the Business Council of Canada have called on Mr.me Freeland on Thursday to back down to avoid harming Canadian businesses.
“The federal government’s imposition of a retroactive and discriminatory tax on digital services will not only make life more expensive for Canadian families, businesses and workers, it will significantly harm our relationship with the United States,” warned Robin Guy, vice-president and deputy head of government relations for the Canadian Chamber of Commerce, in a statement.
“Canada’s major employers are extremely concerned by the federal government’s decision to adopt a digital services tax outside the OECD’s global tax framework,” the Business Council of Canada said in a written statement. “As we have repeatedly warned, this unilateral decision exposes our country to the risk of trade retaliation from the United States, our largest trading partner.”
Both organizations urge Canada to return to international tax negotiations within the OECD.
With The Canadian Press