Quebec managed to do what many thought impossible: to get global technology giants like Amazon, Google and Netflix to collect taxes on their digital sales in Canada.
Nearly 80 foreign companies are now registered to collect the 9.975 percent provincial sales tax in Quebec, as reported by Bill Curry of The Globe and Mail this week.
Where, one wonders, are Ottawa and the other provinces, which so far have done nothing to force these companies to collect sales taxes?
On January 1, Quebec imposed new rules that level the playing field between the national companies, which have always charged the tax, and their foreign-based rivals, which generally do not have.
It is a matter of basic correctness for businesses and consumers. Canadians regularly pay federal and provincial taxes on their subscriptions to national television streaming services, such as Bell's CraveTV and Rogers' Ignite, but nothing on Netflix or Amazon Prime.
Let's be clear: this is not a Netflix tax. This is not about increasing revenue to finance Canadian content. Canadian companies, such as Bell and Rogers, pay in the Canadian Media Fund, and Netflix is spending $ 500 million over five years on Canadian programming as part of an agreement with the federal government.
It is simply a fair application of the sales tax that exists on all companies operating here, regardless of where they are located. From the point of view of public policy, the last thing governments should do is give these global giants a price advantage of between 5% and 15% compared to native competitors in the Canadian market.
Nor is it mainly for the money. Quebec is making an important symbolic and principled position.
But for governments, which often spend more than they earn, extending the tax to foreign companies would be a great chunk of change as digital sales continue to grow. Quebec, for example, estimates that the new rules will translate into $ 45 million per year in additional revenue by 2022-23.
Based on estimates of the Québec government's revenue, forcing these same companies to collect the federal 5% goods and services tax across the country would raise more than $ 110 million a year. Other provinces could increase tens of millions more.
The approach of Canadian laissez-faire to digital taxation has produced some strange inconsistencies. If you purchase Netflix directly from the US-based streaming service, there is no sales tax. Buy the same service through Apple iTunes and pay sales taxes. This is because Apple has stores in Canada, while Netflix does not. Under Canadian tax law, companies must collect and remit GST and HST if they are "carrying on" an operation in Canada.
Similarly, an e-book purchased on Amazon is tax free, while one bought from Kobo is not.
Technically, all Canadians should declare themselves the GST they owe on these purchases and return it to Ottawa. Few of us.
Unless Ottawa intervenes, these anomalies persist. Last year, the commercial committee of the House of Commons urged the government to force foreign digital companies to collect the tax. But Finance Minister Bill Morneau has so far resisted, saying he wants to wait until Canada reaches a consensus with other developed countries to tax digital societies before following Quebec's leadership. Talks between the members of the Organization for Economic Cooperation and Development should not end until 2020. And this is if they can reach an agreement.
As Mr Morneau knows, other countries have or will go on without the blessing of the OECD, including the European Union, Japan, South Korea, Australia, Singapore and some states of the United States.
More likely, Mr. Morneau and the Liberal government are just a little crazy about politics. They do not want to be accused of another tax collection during an election year. After all, they are already facing a negative reaction on carbon tax by the conservatives of Andrew Scheer.
No Canadian wants to pay more taxes. But this is a breeze. It is not complicated and is easily explained to consumers. I subscribe to Netflix, Spotify and Amazon Prime. I understand the principle in question here.
Canada should not be shy in being a leader in this field.
So, yes, Mr Morneau, please tax my Netflix while you draft the federal budget for this year.
Canadians can still punish your government at the polls, but not for this.