Netflix and Internet “Tax” Could Be on the Horizon: Geist

Michael Geist, the Canada Research Chair in internet and e-commerce law at the University of Ottawa law faculty, has today published an article in the Globe and Mail shedding some light on how digital taxes may play a key role in Canadian cultural policy as the government conducts a national consultation on Canadian content in the digital world.

According to documents obtained by Geist, “officials believe foreign sources of funding from international sales and joint productions could play a key role in bringing new money to the system.”

Apparently, the government hopes to introduce a series of new digital taxes, which obviously has good, bad and ugly consequences. The good thing, according to Geist, is the proposal to divert revenues from spectrum licences to cultural funding (effectively a spectrum tax invisible to consumers) and to extend sales taxes such as GST and HST to foreign digital services, Geist writes. That’s a good thing, because it would balance the power play in the market: just consider that CraveTV currently incurs sales tax, while Netflix doesn’t.

The bad, Geist continues, would involve the introduction of the controversial “Netflix tax“: This would require (for example) Netflix to contribute to the creation of Canadian content via a given percentage of revenues.

The ugly part comes if the Netflix tax proves to be a “non-starter”: The government may tax ISPs. As it turns out, Canadian Heritage Minister Mélanie Joly’s legislative overhaul could involve changing the law to make room for new taxes on internet services. This obviously means that internet access would become less affordable and could place connectivity above the financial power of low-income Canadians.