Ottawa underestimates the revenue it could get by taxing services like Netflix

The Liberal government announced in its November Economic Statement that it wants to require services established abroad to collect and remit the goods and services tax or the harmonized sales tax. (Photo: The Canadian Press)

The federal government may be slightly underestimating the tax revenue it could earn by taxing online streaming services like Netflix, according to a report by the Parliamentary Budget Officer.

As it stands, online services established abroad can sell their products and services to Canadians without collecting federal sales tax, leaving individuals to pay these amounts to the Canada Revenue Agency. – which very few people do.

The Liberal government announced in its November Economic Statement that it wants to require foreign-based services to collect and remit Goods and Services Tax or Harmonized Sales Tax, depending on the province.

The government estimated at the time that it could raise more than $ 1.2 billion in revenue over five years, starting this year. However, the Parliamentary Budget Officer (PBO) estimates instead that this new tax revenue could exceed $ 1.34 billion during the same period.

The PBO report admits that there is some uncertainty in this estimate, as it is based on earnings shown in companies’ annual reports and survey data. The PBO also assumed that all companies would comply with federal policy.

In addition, the PBO recognizes that consumers could change their habits if they began to pay more for suddenly taxed services.

Supply management

In a second report released Wednesday, Yves Giroux’s office estimates that the federal government will have to pay compensation of $ 786 million to producers and processors of milk, poultry and eggs in 2021−2022, in order to compensate for their losses of revenues as a result of the new North American Free Trade Agreement.

In its spending update in November, the government promised to compensate producers in supply managed sectors that lost market share under the Canada − United States Agreement – Mexico, but he had not quantified his promise.


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