It can be quite amazing to see how quickly some things can move or change in when it comes to policies or ideas. Sometimes it feels like those policies should have moved faster, because it made so much sense to begin with. Other times, the change surprises because it felt like making that change would take a heck of a lot longer. I was thinking of that today when a certain topic came up: charging sales taxes for online businesses. It wasn’t even four years ago when Stephen Harper started to bellow about the dangers of such things, remember?
Oh yes, that evil Netflix tax. It was going to get us all, and how dare anyone suggest such a thing. It wasn’t an issue that turned the campaign by any stretch, but it’s an interesting thing to look back on now given some recent developments:
CBC’s Chris Hall did a very good piece on this today, where he pointed out how this issue has moved over time. Far from being a point of contention over the concept, now it seems that there is such agreement on this issue that the question people are asking isn’t “Why do this?” but “How hasn’t this happened yet?”. That was the thrust of comments from two different experts quoted in the piece. Both John Anderson, who used to be the Policy Director for the NDP for part of my time on the Hill and Jack Mintz, the conservative University of Calgary economist, agreed on this policy. I can’t think of anything that these two gentlemen would agree on, let alone it being a taxation topic.
And folks, that’s where this debate has gotten to. Both of these learned experts point out the crying issue of fairness that exists in the status quo, one that Stephen Harper was cool with. Why should Canadian digital services, like CraveTV or TSN Direct, be forced to charge their customers sales tax while others like Netflix are exempt? Think about it. If you took a day trip across the border to the US and bought about $150 worth of DVD’s, when you came back into Canada and you declared that purchase, you’d be paying sales tax on the cost of those purchases. So why shouldn’t the same principle extend to digital media like that?
That’s a question that more and more people are asking, and we’re starting to see movement on that. Both Quebec and Saskatchewan now charge PST on those services in their provinces. Yes, a Liberal government and a very conservative government, both arriving at the same place. That should be a true sign of just how much sense this makes and the inherent fairness in it. But as it turns out, they aren’t alone in recognizing the inherent issue here:
Yep folks, you read that story from the Toronto Star right; Netflix is saying they have no problem paying sales taxes and the problem here is that no one is asking them. Seriously? What kind of insanity is this? And to add to that insanity, there is only one party actually proposing to take Netflix up on that, which is the NDP.
Look, I get the reaction everyone has to taxes; no one likes them. That’s a fair reaction. But here’s the thing I think that most people can agree on; if you’re charging a tax on one sector, shouldn’t everyone in that sector be treated the same when it comes to who does and doesn’t pay it? That’s a very simply principle to keep to. And to stay within that principle, you could argue that Canadian digital companies should be exempt from paying these taxes too. That would deal with the fairness issue for sure.
But this crazy story is a prime example of the negative effect of chilling debate on issues like this can have. The fact remains that as our economy changes, as we do more business and get more of our services online, our tax laws need to keep up to ensure that the playing field is level and that the treasury is receiving what they should be. In the first three months of imposing their PST on these digital services, Quebec brought in an extra $15 million in revenue, to help pay for nurses, schools, roads and whatever the government of the day decides. When you extrapolate that onto the Federal scene, you can see what that means in lost tax revenue to Canadian taxpayers, who end up having to take up that slack. I hope that during this election campaign this idea won’t be on the agenda like it was back in 2015; not because it’s ignored but because it’s so widely agreed upon by all. That might be a bit much to ask these days, but when you see the consensus that come around this issue, I think we can be hopeful that maybe the time has come to get this right. We’ll see how it all plays out.