Uber is calling on Canadians to back up its fight with the Canadian government over new taxes.
New rules in Canada’s 2017 budget are asking the ride-sharing business to pay sales tax on each ride, because they will be classified as a taxi business as of July 1, 2017.
U.S.-based Uber allows drivers to pick up passengers and exchange money via an app. It didn’t pay sales tax before, since the app is free to download in Canada.
What that means is the average consumer is now going to see an HST and GST charge on their receipts after using a ride-sharing service, just like they would on a regular taxi ride.
READ MORE: Uber decries new federal tax measures
“Given the broad implications of this announced policy, we felt we had the responsibility to inform Canadians who rely on ride-sharing as riders and drivers,” Uber spokesperson Susie Heath said in an email. “We’ve encouraged them to share their views on how affordable transportation is good policy for cities and for Canadians.”
Uber says that since small business owners who make less than $30,000 are exempt from sales tax, their drivers should also be exempt.
“Federal tax laws already offer small business owners a break on collecting sales tax, but unfairly exclude taxi drivers. The best way to support taxi drivers and level the playing field is to extend the same exemption to them,” Uber Canada’s regional director said in a statement last week.
But Michael Geist, Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, called it nonsense.
“It isn’t a unique tax on Uber. It is simply the generally applicable sales tax,” Geist said in an email to Global News.
“Uber itself generates far more and their drivers would benefit from the collection and remission,” Geist explained. “Uber would collect and pay the tax on their behalf. There is no additional work or lost revenue for the driver.
“In fact, there are gains, since they will be entitled to a six-per-cent rebate to offset the GST they pay on things like gas and repairs.”
Geist also notes that Uber drivers in Montreal already pay the sales tax, thanks to provincial regulations. On the company’s website, it offers tips and suggestions on how its drivers can file taxes.
Geist also says that this ruling can also open the door to taxing other foreign digital services like Netflix.
“I think tax fairness is important. Why should Canadian firms such as Canadian taxi drivers and CraveTV face collection of sales tax, but foreign providers don’t?”
In a statement, Uber Canada said there were more than a million Canadians “who use ride-sharing to earn income and get around their cities.”
Uber pulls out of Denmark
It’s not the first time Uber’s taken action against new regulation.
The Danish branch of Uber shut down its activities in Denmark over a law proposal that toughens standards for cabs.
Uber’s spokesman in Denmark, Kristian Agerbo, said Tuesday, “We must take the consequence,” adding that the proposal — which says cars-for-hire must have seat occupancy sensors and metres — was “going in the wrong direction.”
Danish prosecutors have said Uber — banned in several cities in Europe — is akin to an illegal taxi service, and a court ruling is pending on the company’s services.
— with files from Monique Scotti and Associated Press