June 15, 2017 11:59 am
Updated: June 15, 2017 12:05 pm

Proposed ‘Netflix tax’ dead on arrival as minister rejects the idea

Trudeau confirms no broadband, 'Netflix' tax

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A recommendation to impose a new five per cent tax on high-speed internet services in Canada was promptly rejected by the heritage minister Thursday, just minutes after it was made public by a parliamentary committee.

Melanie Joly’s office confirmed to Global News that “there are no plans for a new tax” on the high-speed internet service that makes it possible for Canadians to enjoy services like Netflix, Apple Music and Crave.

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Joly’s office said the government is committed to reducing taxes for Canadians, not extending them. Prime Minister Justin Trudeau said the same during a stop in Montreal on Thursday.

The comments came less than an hour after the House of Commons Heritage Committee released its report with 20 recommendations aimed at helping Canada’s slumping media industry adapt to the rapidly evolving landscape.

READ MORE: MPs to push for 5 per cent tax on Netflix and other streaming services

Among the committee’s suggestions was the extension of a five per cent tax, which is already applied to broadcasters, to broadband internet service. The goal, according to the committee, was to lift an industry struggling to adapt to technological changes and evolving consumer habits.

“At the moment, as you well know, there is a five per cent levy on broadcast media in order to be able to help them bring (in) Canadian content,” said committee chair and Liberal MP Hedy Fry.

“We found that this was a risk that they would go into streaming and escape the usual five per cent tax … so we’re suggesting that that five per cent levy be expanded to include streaming.”

The proposal, which was opposed vehemently by the Conservative members of the committee, would have added hundreds of millions of dollars in revenues to the Canadian Media Fund, which already receives a levy on cable bills to finance the production of Canadian content.

Joly was expected to say more at a press conference on Parliament Hill early Thursday afternoon.

Other recommendations tabled by the committee could still be adopted by the government. They include requiring the publicly funded CBC to eliminate advertising on its digital platforms, letting media companies deduct taxes on digital advertising on Canadian-owned platforms and a tax credit for print outlets for a portion of their digital investments.

Conservative MP Peter Van Loan, who sat on the committee, said his party rejects any increased government involvement in the media sector and any new taxes.

“Change brings disruption,” he said. “In our view, higher taxes and government control of the news is not the answer to the problem.”

The Canadian Taxpayers Federation, meanwhile, expressed relief at Joly’s quick rejection of the idea of a tax.

“A new internet tax is a terrible idea, and would make the internet less affordable for Canadians,” said federal director Aaron Wudrick.

“Even worse would be using the revenue to create a new corporate welfare slush fund for the government to subsidize their favourite media outlets.”

The heritage committee has spent more than a year studying the industry, which has been steadily losing advertising revenue and market share to online giants such as Facebook, Netflix and Google.

— With files from the Canadian Press

© 2017 Global News, a division of Corus Entertainment Inc.

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