GST on Netflix still a possibility as Liberals review cultural production
Published Sunday, October 16, 2016 7:00AM EDT
Last Updated Monday, October 17, 2016 10:23AM EDT
Canadian Heritage Minister Melanie Joly won't force streaming services like Netflix to pay into the Canada Media Fund, but all other options are open - including charging GST - as her department reviews the country's cultural production.
"This is a broader question [than a tax]. It's about the participation of digital platforms to the system," Joly said in an interview with Evan Solomon, host of CTV's Question Period.
"We're looking at all scenarios right now and certainly we want to engage with the different digital platforms in a conversation on how they can support Canadian content.... But the reality is we want to have every single stakeholder of the ecosystem [be] part of this conversation."
A number of widely used digital companies, including Netflix, don't pay corporate taxes in Canada because they're headquartered elsewhere. They also don't charge HST or GST on purchases by Canadians, leaving it up to consumers to remit those taxes with their income tax every year, which means essentially nobody pays up. And unlike domestic telecommunications companies, foreign companies don't pay into the Canada Media Fund that contributes to TV and digital media productions.
A Netflix tax would require streaming services to pay into the Canada Media Fund to help pay for more Canadian content, but Joly has already ruled that out.
She's less clear, however, on the questions of whether the Liberals will have streaming services collect and remit sales taxes, and whether the government will tax Internet service providers.
"This is a conversation, of course, that I'll be having with the minister of finance, Bill Morneau, regarding sales tax," Joly told Solomon.
"This is not necessarily under the purview of Canadian heritage -- it's much more under the purview of my colleague."
The reality, Joly said, is that every culture minister in the world is asking themselves how to deal with the shift to digital content.
'Be open to all ideas'
The foreign streaming companies, which also include Hulu and Amazon, are "part of our ecosystem," Joly said, and are used and liked by Canadians.
"We want to make sure that, while we know that they're using a large part of our spectrum, that we can have a conversation with them to see how they can participate."
The cultural sector is broad, encompassing everything from books to movies to video games. Joly says she wants people to give her their most bold ideas, citing previous cultural planning rounds that created institutions like the CBC and the Canadian Radio-Television and Telecommunications Commission.
"What is the best scenario to make sure that we can have a thriving cultural sector, but also [so] we can create the new institutions of the future that will be helping us?" Joly said.
"Right now it is my job to be open to all ideas and not to prejudice any of them because I really think that this is a complex issue."
The Liberals have boosted funding to the CBC at the same time a House committee studying Canadian Heritage has heard from newspaper companies that they have to compete against the public broadcaster for advertising revenue.
Joly said the Liberals believe in public broadcasting, but didn't offer any solutions for the struggling news industry.
"This is exactly why we launched public consultations," Joly said.
"I decided to take the leadership on this. This was not part of my mandate letter. I thought that in order to really have a new vision for our country we had to have this broad conversation and this is exactly why we're having it."
This story has been changed from an earlier version to clarify what Apple charges on digital purchases. Apple charges HST and GST on digital purchases.