Taxman to target Netflix?

Original Author: Jim Slotek


Once again the subject of GST on Netflix is in the news, and guess who now supports the idea? If you guessed the government currently in power, you guessed correctly!

Friday, January 20th, 2017 | BUSINESS ECONOMY TAXATION

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Is your Netflix bill about to be “Liberalized?”

Multiple media reports in advance of the 2017 budget, suggest the Trudeau government is about to backtrack on an election promise to not tax Netflix and other foreign-based digital media services.

In doing so, they would be joining other countries and jurisdictions that are seeking redress against lost tax revenue from cable-cutting.

Reports by the CBC and Globe and Mail suggested that the so-called “Netflix Tax” (also affecting services like iTunes and Amazon) will be included in Finance Minister Bill Morneau’s upcoming budget.

Foreign-based digital services like Netflix currently are not required to add provincial or federal tax to the fees they charge subscribers.

The hypothetical tax became a federal election issue in August, 2015, when then-prime minister Stephen Harper vowed not to regulate or tax Netflix and similar services. He accused the other parties of planning the opposite, prompting denials.

At the time, Liberal spokesman Cameron Ahmad told the Toronto Sun the party did not support a Netflix tax.

“The suggestion that we do is fiction,” he said.

Since then, however, the perception within governments at every level is that the pace of cable cutting has cost them a tremendous amount of tax revenue.

On Jan. 1, Pasadena, Calif., began collecting a 9.4% tax on streaming services. It is the first of more than 40 municipalities in the revenue-stressed state that are said to be considering a such a move.

The government of Australia has been working out the details of a 2015 decision to invoke its national goods and services tax on Netflix. The tax would amount to 10% on videos, games and music marketed to Australians by offshore companies.

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