BUSINESS

Internet Tax Widely Opposed By Canadians, But GST On Netflix Not So Bad

02/06/2017 11:49 EST | Updated 02/06/2017 11:52 EST

Canadians are opposed to the federal Liberals instituting a new tax on Internet and mobile services to pay for Canadian content, but a plurality would be okay with paying sales tax on their Netflix service, a new poll finds.

The poll from IRG, carried out for consumer advocacy group OpenMedia, found 70 per cent of respondents were opposed to a new tax on internet and cellphone bills, with 51 per cent strongly opposed. Only 14 per cent backed it.

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Heritage Minister Melanie Joly held consultations last fall on the future of Canadian media in a digital world. (Photo: The Canadian Press)

During consultations last fall, Heritage Minister Melanie Joly heard from media industry representatives who argued for a tax on the Internet to cover the cost of funding Canadian content. Revenue for CanCon is drying up in an era when traditional Canadian media is competing in a global Internet.

A majority of Canadians back the idea that the federal government should create a new source of revenue to pay for CanCon, the IRG poll found. Fifty-three per cent agreed, with 20 per cent opposed.

Canadians are more responsive to the idea of extending GST/PST or HST sales taxes to streaming services such as Netflix. Forty-seven per cent say they would agree to this, with 29 per cent opposed.

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Chart: Innovative Research Group

Foreign-based streaming services are technically subject to sales tax on their Canadian sales, but no system has ever been established to collect the tax.

A briefing prepared for Heritage Minister Melanie Joly last month suggested expanding the sales tax to cover Netflix. It argued that not charging a sales tax on foreign content services like U.S.-based Netflix is unfair because it places domestic competitors at a disadvantage.

It also “represents a significant loss of potential tax revenue for government,” the briefing stated.

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Finance Minister Bill Morneau's department has been adamant it is not planning to implement taxes on the Internet. (Photo: Chris Helgren/Reuters)

Joly held consultations last fall where she heard from media industry representatives who argued, among other things, for an Internet tax or at least a sales tax on streaming.

But the Department of Finance has been adamant that no such taxes are in the works. A spokesperson for Finance Minister Bill Morneau told HuffPost Canada last month that expanding the GST to Netflix “is not part of our plan.”

Speaking before the Canadian Media Producers Association last week, Joly said she heard from Canadians that they want all media providers to be treated equally, but they don’t want to see their Internet bills go up.

"We have to bear in mind that Canadians are anxious about their cost of living," Joly said, as quoted by the CBC.

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