•  Canadian providers collect tax on downloads while foreign providers don’t

OTTAWA, ON: The Canadian Taxpayers Federation (CTF) is calling on the Harper government to end the practice of forcing Canadian providers to charge GST and HST on digitally downloaded movies, TV shows, and music.

The recommendation is contained in the CTF’s submission to the federal finance department’s consultation panel, set-up in the February 2014 budget to look into cross-border taxation issues.

A study last year showed that 21 per cent of Canadian households subscribe to Netflix, the popular U.S. online service that allows unlimited viewing of its library of movies and TV shows, for $8.99 a month. Canadians can also download a wide variety of digital entertainment from U.S. services such as Apple’s iTunes, or Amazon.com, without GST or HST. But if Canadians download the same movies, music or TV shows from a Canadian provider, they pay the full GST or HST on the purchase.

“All digital entertainment should be available tax-free to Canadians,” said CTF Federal Director Gregory Thomas. “Our tax system shouldn’t put Canadian companies at a disadvantage.

“What if Canadian Tire had to charge GST or HST but not Wal-Mart or Costco?” said Thomas. “Canadian Tire would go out of business. That’s exactly what’s going to happen to Canada’s phone and cable companies if we don’t fix this. Who is going to buy a movie from a Canadian video-on-demand service if it costs 13 per cent more because of GST and HST?”

Thomas dismissed the idea of forcing offshore digital entertainment providers to collect Canadian tax as “pie-in-the-sky fantasy.” “Savvy Canadian consumers use every trick in the book to dodge Canadian taxes on entertainment,” said Thomas. “It’s time the government stopped turning Canadian into tax-dodgers. There should be a level playing field for Canadian businesses trying to compete with Netflix.” 

To download the report click here