Ontario Urges Feds to Delay Digital Tax on Major Tech Giants

Ontario Premier Doug Ford is again urging the federal government to hold off on introducing its Digital Services Tax, warning it could harm jobs in Canada.

Ford’s statement, made as Americans prepare to vote in the U.S. presidential election on Tuesday, emphasizes the importance of Canada-U.S. trade relations, which support millions of jobs on both sides of the border.

“I continue to urge the federal government to delay the implantation of the digital services tax, which is putting Canadian jobs at risk,” said Ford in a statement on Monday.

Ford highlights that Ontario alone would rank as the U.S.’s third-largest trading partner if it were a country, with trade totaling $493 billion CAD in 2023.

Ontario is calling for Canada to stay in line with U.S. trade policies, pointing out that Canada previously matched U.S. tariffs on Chinese imports like electric vehicles and steel to protect Canadian workers. Now, he believes delaying the digital services tax is important to keeping Canadian businesses competitive and ensuring strong economic ties with the U.S.

We need the federal government to pause the implementation of their Digital Services Tax.

For our American partners, this is nothing but an unfair tax that’s putting millions of Canadian jobs at risk. pic.twitter.com/9cozP3MT88

— Doug Ford (@fordnation) October 19, 2024

Back in July, Canada enacted the Digital Services Tax, which applies on revenue from companies providing digital services to Canadians or selling user data, effective June 28, 2024, retroactive all the way back to 2022. It’s a 3% levy.

The feds argue the tax will generate $2.3 billion for the government by March 2025 and close to $6 billion over five years. It’s a plan that is essentially copying Britain, France and Italy.

“Canada’s priority and preference has always been a multilateral agreement. Canada strongly supports international efforts to end the corporate tax race to the bottom and to ensure that all corporations, including the world’s largest corporations, pay their fair share,” said Katherine Cuplinskas, a spokeswoman for Finance Minister Chrystia Freeland, in a statement to The Globe and Mail.

“The Canadian government has been clear for several years that it would move forward with its own Digital Services Tax if a global agreement is not reached. Unfortunately, despite best efforts, repeated deadlines to reach an international agreement have come and gone,” said Freeland’s office.

The U.S. government is divided on numerous issues, but there’s rare bipartisan support to fight Canada’s Digital Services Tax. Numerous U.S. trade associations have made it clear the American government is ready to take actions against Canada over the digital tax.

Besides the Digital Services Tax, the feds also have the Online Streaming Act, which slaps a 5% tax on revenues from U.S. streaming services operating in Canada. Amazon, Apple, Spotify and YouTube, for example, are fighting against the tax. You can bet that any added taxes on tech giants will result in price increases directly onto consumers, and possibly even more (like what we saw from Spotify). Oh, Canada.