The U.S. could take retaliatory measures against digital trade if Canada proceeds with its proposed digital services tax (DST), warned David Cohen, U.S. ambassador to Canada.
Despite 138 countries deciding to delay similar measures, the Canadian Liberal government confirmed its intent to implement the tax on Big Tech by 2024.
In a conversation with National Post’s John Ivison, Cohen noted that U.S. Trade Representative Katherine Tai had previously cautioned Canada against the implementation of a unilateral tax. The retaliatory measures could involve digital trade, he stated.
The DST, anticipated to generate $3.4 billion over five years, is designed to target large companies operating online marketplaces, social media platforms, and those profiting from online advertising, such as Amazon, Google, Facebook, Uber, and Airbnb.
This tax was initially promised in the 2021 budget and would apply retroactively to 2022, making these companies liable for over $1 billion once implemented.
The Canadian DST is contingent upon whether a multilateral tax agreed by OECD countries is implemented by 2024. This would entail a global minimum corporate tax rate of 15%. However, last week, OECD countries agreed to delay plans for unilateral taxes by another year. Canada, along with Belarus, Pakistan, Russia, and Sri Lanka, did not support the delay.
Back in 2021, Canada agreed to delay the DST, but this time it’s forging ahead on its own, not following its partners. The delay was for two years from January 1, 2022. “In that event, the DST would be payable as of 2024 in respect of revenues earned as of January 1, 2022. It is our sincere hope that the timely implementation of the new international system will make this unnecessary,” said then-Finance Minister Chrystia Freeland at the time.
Cohen expressed optimism that Canada and the U.S. could resolve their disagreements on the matter without resorting to retaliatory trade measures.
Patrick Leblond, the CN–Paul M. Tellier chair on business and public policy at the University of Ottawa, suggested that while the U.S. might retaliate with traditional measures like tariffs on Canadian goods, there is no clear measure specifically targeting digital trade.
The agreement established by the OECD is aimed at curbing tax avoidance strategies employed by multinational corporations. Techniques like the ‘double Irish with a Dutch sandwich’, which allow profits to be moved to locations with low or no tax, have been utilized by companies including Apple. This deal aims to put an end to such practices.
This tax on Big Tech targets several large U.S. companies, amidst the Canadian government’s ongoing conflict with Google and Meta over the Online News Act. The repercussions of the U.S. targeting Canadian entities such as Shopify in retaliation remain unclear, with Leblond highlighting potential adverse effects on U.S. small and medium-sized businesses using the platform.
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the liberals need to resign or have another election and hopefully be tossed from office. i wish quebec and toronto would stop voting in these liberal and ndp governments.
Don’t worry. If this doesn’t work, we’ll have a carbon tax paying for the cost of implementing the carbon tax that will help pay for the over 10 billion invested in an EV factory (in Ontario, of course) I haven’t actually looked but I’m sure we’re far further into debt than we’ve been in history thanks to these stunts.
This is what happens when you have a man child tossing money at things that only help his political status and not the country he is supposedly serving.
TLDR: we’ll be paying for this for years to come because money grows on trees according to the current government.
What’s wrong with paying for it for years? Isn’t investing in a plant that keeps all the well paying auto jobs in Canada, that have existed for decades, worth the investment? It will pay for itself.
If EVs continue to be popular rather than just a fad. I still feel like they’re mainly bought as a second vehicle and plug in hybrids are the way to go.
If ice vehicles cannot be sold by 2035, they’d best have this charging infrastructure all set up, from the largest city to the smallest village if they want this to succeed. How much will that cost?
Not sure but the incentives appears to be present. With the recent wider adoption of NACS I think it will take off.
A fad???? ICE vehicles are being phased out worldwide. If you don’t buy into the “fad”, you’ll be walking or riding the (EV) bus.
If you include the indirect jobs created (and I suspect the 30,000 figure to be suspicious, at best) it works out to the government (read: us) paying $485,000 for every one of those jobs. To put that into perspective it’s the equivalent of a free bungaloo (outside of the GTA) for 33,000 Ontario families.
I get that math in the mid term, but considering how long the legacy auto makers have been working cross border with Detroit, I think this is another 100 year bet which makes that math irrelevant.
Everything from mining lithium, to research on EVs and their production and their software, will now be done in Canada. It will boost these Canadian companies like E3 that are making lithium from old oil wells.
The alternative is to keep Canada a resource exporter only. Alberta made that mistake and has failed to refine their product for the last forever, we shouldn’t make that mistake again.
What exactly do you think the 30,000 indirect job estimate was based on? You’re tacking on windfall jobs that were accounted for in the $485,000 per breakdown.
Jobs versus skills. This brings in a deep understanding in this field that wouldn’t exist otherwise. Same idea as how the US doesn’t really know how to build nuclear reactors anymore because there were generations where new reactors were not built, the knowledge got lost. This brings knowledge beyond extractative industries and keeps it entrenched here. This investment is only bad if you’re trying to make sense of it over the next two decades. Measure it over the next five decades instead.
There will be a finite number of jobs and supporting jobs for the EV battery industry. 9M ICE vehicles on the road in Ontario. 71,000 people employed in or supporting the oil industry in the province. As oil use winds down those 71,000 people will be made redundant and be taking the new jobs in the EV sector, with an actual net gain in jobs being far less than the pie in the sky numbers you’re forecasting.