House Call with Carol Hughes

It is time for web giants to pay their fair share

When a company does business in Canada it is expected they will pay taxes. Whether they’re owned by Canadians or not, there’s a cost to doing business here. That model of paying to operate in our country has changed in recent years with the advent of web-based businesses and particularly those that are considered web giants. This new arrangement is going to have to change if we are going to maintain a tax structure that allows us to pay for things like our military or medicare.

It’s no secret that we have become more reliant on the services the internet provides. That means the handful of companies that control many of these platforms have become omnipresent in our economy. These web giants like Facebook, Google and Amazon among others have been entitled to preferential treatment inside Canada and haven’t been subject to the same rules we apply to our own companies. While Canadian companies, broadcasters and media are paying their fair share, Facebook and Google alone generated almost $5.1 billion in advertising revenue inside Canada, without paying a cent in taxes. How is this fair?

While it’s reasonable to expect that any government would stand up to these companies, they are being given a pass. In fact, the government went even further down this unproductive route by signing a secret deal with Netflix without any transparency or consultation with the provinces. What’s worse, the secret deal wasn’t even needed to keep this business in Canada. Netflix has even stated they are willing to collect taxes, but nobody is asking them to. That means they don’t pay to operate in Canada and do not collect HST on the service they sell in the country because nobody thought to ask for it.

There was no shortage of opportunities to discuss these issues either. In less than a year, the government met with web-giant lobbyists nearly 200 times. On top of that, several former Liberal party employees now hold important positions in these foreign multinationals which also receive at least $2.75 billion in subsidies a year. It’s also clear that there is a back and forth at play, with Google’s former communications director now employed as the Minister of Tourism’s chief of staff.

Without tackling the loopholes foreign web-based businesses operate under in Canada, our own businesses are forced to compete on an uneven playing field, and everyday Canadians have to shoulder more of a tax burden. That said, the challenges related to web giants go beyond taxation since their presence can overshadow Canadian businesses, especially those in the telecom sector.

This makes it more difficult to preserve and promote Canadian culture in the face of online juggernauts. We have long known that our diverse and distinct culture requires some assistance as it butts up against the larger more dominant America. That requires negotiation, and rules of engagement that are well-defined. It’s hard to know if that is the path the government took when their negotiations with companies like Netflix are shrouded in secrecy.

New Democrats believe these web giants should have to pay their fair share in taxes and not receive preferential treatment. A level playing field that doesn’t put Canadian business at a disadvantage becomes impossible without treating these companies in the same way we do our own businesses. It isn’t difficult to argue that it should be up to Canadians to write the rules instead of letting foreign companies call the shots, but government after government has given the web giants a free pass. It’s time for that to stop.