11/15/2017 16:58 EST | Updated 11/15/2017 17:16 EST

Quebec Liberal MPs In Awkward Spot As Feds Rule Out Netflix Tax

The streaming service is "not a charity."

Mike Blake / Reuters
The Netflix logo is pictured on a television in this illustration photograph taken in Encinitas, California,on Jan. 18, 2017.

OTTAWA — Prime Minister Justin Trudeau is standing firm on his promise not to impose a tax on Netflix and Liberal MPs from Quebec, where the province is prepared to do it alone, say they'll live with his decision — at least for now.

Backbencher Nicola Di Iorio said he doesn't think taxing Netflix is currently possible, as it would be difficult to enforce.

"We are faced with a new technological world and practices that have been devised in an era where everything was tangible," said the MP for Montreal's Saint-Leonard—Saint-Michel.

Still, Di Iorio said he believes there should eventually be a tax on Netflix, once the federal government figures out how to do it.

"Netflix is not a charity, so one day tax will be collected, for sure," he said, adding that he and his colleagues in the Quebec Liberal caucus will keep pushing for that, even if it is not happening any time soon.

"It's supposed to be taxed, so eventually it would be logical to do it when our processes are in place and also, my colleagues do react to what they hear and what I hear from citizens of Quebec."

The issue has been at the core of objections to a revamped cultural policy unveiled in September by Heritage Minister Melanie Joly. It included securing a $500-million pledge by Netflix, the online video streaming giant based in California, to set up a Canadian branch of operations and fund original homegrown content.

Quebec cultural leaders unhappy with Liberal plan

Netflix also committed to spend $25 million on strategy to develop the market for French-language content, but the lack of a contractual obligation to actually go ahead and produce it came under heavy scrutiny in Quebec, where Joly and her plan were pilloried and dismissed as naive.

The fact that the cultural policy did not come with a plan to impose a sales tax on Netflix — something Trudeau promised on the campaign trail he would not do — was another irritant, as Quebec cultural industry leaders described it as an unfair subsidy.

That irritant has flared up again in recent days, as Quebec Finance Minister Carlos Leitao sent a letter to federal Finance Minister Bill Morneau on Nov. 7 calling on Ottawa to join them in taxing foreign online businesses, including Netflix, but warning that the province was also prepared to go it alone.

Then on Tuesday, Pierre Karl Peladeau, the president and CEO of Quebecor, urged Ottawa to take Quebec up on the opportunity.

The general feeling in the population is that it's unfair.Liberal MP Alexandra Mendes

The federal Liberal government has no plans to change its mind, according to a spokeswoman for Morneau, but will allow Quebec to go ahead.

Netflix did not respond to a request for comment Wednesday.

The decision to stand firm has put some Quebec Liberal MPs in a tough position: they understand a federal tax on Netflix is not in the cards but are hearing about it from constituents and understand their concerns with the $500-million agreement.

"The general feeling in the population is that it's unfair," said Liberal MP Alexandra Mendes (Brossard — Saint-Lambert).

"Even when you explain that the tax would not do anything for the producers or for the creators, that they wouldn't gain anything with having a consumers tax added to the product . . . they still think it's unfair," she said.

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Liberal MP Peter Schiefke said he thinks Joly made the best decision of all the options, as he does not think a Netflix tax would guarantee investments in Canadian content like the $500-million agreement.

Still, he said the Quebec Liberal caucus will be watching things closely and making sure Netflix is doing what they hope it will do.

"My goal here is to ensure that those who are in the industry in my community will benefit from this agreement," said Schiefke (Vaudreuil — Soulanges).

"I think it is up to us as a caucus to make sure that we are following how this is moving forward, that we put our own pressures on Netflix to ensure that Quebec is getting its fair share of those investments, to really be the strongest voices for Quebec content and make sure that is indeed happening," he said.