The Liberal government has all the sufficient support in Parliament to unilaterally impose a tax on digital services as early as 2024. The idea risks angering the United States, but pleases the Bloc Québécois and the New Democratic Party, who want this tax as soon as possible.
“It is certain that we will invite the government to hold its own”, reacts on the phone Martin Champoux, spokesman for the Bloc Québécois in terms of Heritage.
According to his vision of things, the big digital companies have “benefited very largely from the buffet for a long time”, and the government does not have a minute to lose before imposing the 3% tax on them first proposed by the federal government in 2019, but put on ice until 2024.
“This money must be used for those who are suffering from the arrival of the giants of the Web,” adds the Bloc MP, who mentions the news media or small retail businesses as an example.
New Democratic Party (NDP) critic on tax inequality, Niki Ashton, agrees. “The Liberals should have done it before, as they promised three years ago. […] It is completely unacceptable that Google, Facebook, Netflix and other billionaire companies pay less tax than the people who use their services,” she wrote in a statement sent to the Duty.
The Canadian government recently rejected the idea of delaying the imposition of its digital services tax for another year, at the request of 138 countries which are negotiating a minimum tax on multinational companies, under the aegis of the Organization for Economic Co-operation and Development (OECD) and G20.
In an unlikely group of countries including Russia, Belarus, Pakistan and Sri Lanka, Canada was one of the few participating states not to sign the declaration that called on it to wait until 2025 to create its own tax. Ottawa is instead demanding a clear timeline for international tax reform, failing which very large web companies will receive a tax bill retroactive to 2022 for their activities in Canada. A similar tax already exists in France and the United Kingdom.
The United States does not want it
Canada’s decision to insist on creating its digital services tax openly displeases the United States. At least twice in July, US Trade Representative Katherine Tai warned her Canadian counterpart against the idea.
” [Mme Tai] urged Canada to forgo imposing a digital services tax while the OECD process continues this year,” reads the official minutes of his bilateral meeting with International Trade Minister Mary Ng. .
In an open letter, the Business Council of Canada alerted the Trudeau government to the risk that Canadian businesses will unfairly pay the price for this bravado. The group of large companies fears in particular lawsuits under the Canada-United States-Mexico Agreement (CUSMA).
“We think it’s a bad business practice, with a privileged, unique business partner. We had a trauma with the renegotiation of NAFTA. Now we put ourselves in a position where we alienate them very directly, ”explains its vice-president of policies, Robert Asselin.
He believes Canada is making this “hasty move” at the worst possible time, with the 2024 US election looming on the horizon. In this electoral climate, parties could propose protectionist policies against Canada.
“It shows a certain desperation, almost, in terms of the lack of income. The government needs revenue because it has spent a lot,” analyzes Robert Asselin, who once worked in the office of former Liberal finance minister Bill Morneau.
The current finance minister, Chrystia Freeland, has already drafted a bill, the details of which have also been presented in a preliminary way to Parliament. His office confirms that he must always go through the adoption of a bill in good and due form to have the approval of the House of Commons, in which the Liberal government is in a minority. The text must therefore have the support of at least one opposition party.
“Canada strongly supports international efforts to end the race to the lowest tax and to ensure that all corporations, including the world’s largest corporations, pay their fair share. The Canadian government has made it clear, and has been for several years, that it will go ahead with its own digital services tax if a global agreement is not reached,” reiterated the Minister’s press secretary. Freeland, Katherine Cuplinskas, in an email.
The Conservative Party of Canada did not respond to questions from the Duty at the time these lines were written.