Ottawa's refusal to tax Netflix puts some Quebec Liberal MPs in a tricky spot
A Netflix customer uses Netflix in Palo Alto, Calif. (AP / Paul Sakuma)
Joanna Smith, The Canadian Press
Published Wednesday, November 15, 2017 4:58PM EST
Last Updated Wednesday, November 15, 2017 5:51PM EST
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 will live with a decision that puts them in a tight spot -- 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 the Montreal riding of 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.
"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.
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 was not accompanied by a plan to impose a sales tax on Netflix -- something Trudeau promised on the campaign trail he would not do -- was another irritant, with Quebec cultural industry leaders describing it as an unfair subsidy
That irritant has flared up again in recent days. Quebec Finance Minister Carlos Leitao sent a letter to federal Finance Minister Bill Morneau on Nov. 7 calling on Ottawa to join the province in taxing foreign online businesses, including Netflix, but warning that Quebec is 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 federal Liberal government has no plans to change its mind, according to a spokeswoman for Morneau.
"Should the province determine they want to move forward on imposing a sales tax on Netflix, they can proceed," Chloe Luciani-Girouard wrote in an email Wednesday.
Netflix did not respond to a request for comment.
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.
"It's obviously a live issue among the Canadian population, it's a live issue in Quebec and it's a live issue in discussions that we're having," said Greg Fergus, Liberal MP for Hull -- Aylmer.
Simon Ross, a spokesman for Joly, said the minister hears and understands the concerns of Quebecers.
"That is why the government has invested more than $2.2 billion in culture, to protect and promote our culture," he said.
Liberal MP Alexandra Mendes said the general feeling in Quebec is that Netflix should pay its fair share.
"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," said Mendes (Brossard -- Saint-Lambert).
Not everyone is on the same page.
"We have to find a way to support really, really good stuff that is Canadian in this new era where it's a free-for-all," said Montreal MP Marc Miller, parliamentary secretary to the minister of infrastructure.
"That's tough and we'll make mistakes, but if we have this commitment and this deep reflection, I think it will be positive for Canadian content."
Liberal MP Peter Schiefke said he thinks Joly chose the best option available, but noted the Quebec Liberal caucus will be watching how things unfold.
"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," said Schiefke (Vaudreuil -- Soulanges).