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Liberals, Conservatives promise new rules for Netflix

News | 09/30/2019 5:27 pm EDT
Prime Minister Justin Trudeau speaks to supporters at a Liberal Party fundraising event in Kanata on Aug. 21, 2019./ Photo by Andrew Meade.

The Liberal Party platform, released Sunday, includes promises of new regulations for Canadian content on streaming services — while the Conservatives gear up to announce new taxes affecting foreign digital giants, the specifics of which are still unclear.

As Heritage Minister Pablo Rodriguez promised back in June, the Liberal Party is now promising that it will ensure “all content providers – including internet giants – offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content in both official languages, and promote this content and make it easily accessible on their platforms.”

If re-elected, the party is now promising to move forward with the legislation to make that happen within the first year of its new mandate.

On Sunday evening, Conservative leader Andrew Scheer appeared on popular Quebec talk show Tout le Monde en Parle, and said that the Conservative platform would include measures to ensure foreign digital platforms are subject to additional tax.

In response to a question about whether a Conservative government would begin requiring foreign digital services like Netflix Inc. to collect sales taxes, Scheer said, in French, that his party’s platform would include measures “targeting web giants to ensure they contribute to our society, to the government’s revenue.”

Asked whether that means levying taxes on revenue earned in Canada, Scheer responded “that’s it,” and said that there is a need to ensure a level playing field between different companies.

Host Guy Lepage joked that Scheer sounded like the leader of the NDP, a party that has long called for those measures and has pledged to extend sales tax to foreign streaming services.

On Monday at a press conference in Whitby, Ont., Scheer said further details about his plans would be revealed “in a few days,” but indicated that his party would actually make changes to corporate taxes, not the application of sales tax.

“It will be aimed at making sure that massively profitable companies who collect hundreds of millions of dollars worth of revenue out of the Canadian economy pay their fair share,” he said.

The idea of requiring foreign over-the-top platforms to collect and remit sales tax — as domestic services have to do — is a promise the Liberals have stayed away from for the past four years. That’s been the case since the last federal election, when Scheer’s predecessor Stephen Harper accused the Liberals of wanting to put in place a “Netflix tax,” leaving the party repeatedly promising it had no intentions to put such a measure in place.

Asked by reporters what changed since the last federal election, Scheer said: “As we pointed out in the last election, the Liberal approach was to put another tax on consumers. What I’m talking about is ensuring, the same way all Canadian companies pay a certain percentage of their revenue in taxes to the federal government, as has always been the case, that foreign multibillion dollar corporations who are collecting hundreds of millions of dollars worth of revenues in ad revenues or subscription fees pay their fair share….so it’s about creating a level playing field on the corporate side of things.”

Scheer spokesman Daniel Schow declined to offer further details on the plans Monday afternoon.

Scheer’s comments Monday indicate that his plans may actually be in line with what the Liberals are promising. While lacking measures on sales tax, the Liberal platform promises to “make sure that multinational tech giants pay corporate tax on the revenue they generate,” at a rate of three per cent.  A Liberal spokesperson specified that it would apply to “revenue generated through the sale of online advertising and user data by digital companies with global revenues of at least $1 billion a year, and Canadian revenues of at least $40 million a year.”

But when it comes to collecting and remitting sales tax, the platform only says the party would “work to achieve the standard set by the Organisation for Economic Co-operation and Development (OECD) to ensure that international digital corporations whose products are consumed in Canada collect and remit the same level of sales taxation as Canadian digital corporations.” The Liberals have long said they are waiting for the OECD to come to a consensus on the issue.

The Liberal platform also promises the creation of a new Canadian Consumer Advocate, which would “serve as an independent, single point of contact for people who need help with banking, telecom, or transportation-related complaints.” Currently, the Commission for Complaints for Telecom-television Services (CCTS) is in charge of handling telecom-related complaints. 

It also said a re-elected Liberal government would require social media platforms to “remove illegal content, including hate speech, within 24 hours or face significant financial penalties.” It added this rule would also encompass “other online harms, such as radicalization, incitement to violence, exploitation of children, or creation or distribution of terrorist propaganda.”

Earlier this year, Democratic Institutions Minister Karina Gould told a House of Commons ethics committee that her government was moving closer to requiring internet companies to remove illegal content from their platforms. 

The Liberal platform also reiterates previous promises, including the pledge the Liberals made in their last pre-election budget and then again in their Connectivity Strategy, to connect 95 per cent of Canadians to internet speeds that meet the CRTC’s basic service standards by 2026, and 100 per cent by 2030.

It also promised that the party would move forward with the “digital charter” it released in May, which includes measures such as enhancing the powers of the Office of the Privacy Commissioner. 

Last week, the party announced its plan to lower cellphone bills by 25 per cent over four years.

The release of the Liberal platform leaves the Conservatives as the only major party not to release a full platform. Scheer said at the press conference on Monday that his party would release that document ahead of the advance polls, which begin on October 11. 

The Conservatives are also the only major party that hasn’t made an issue of telecom affordability, something that bodes well for industry, Canaccord Genuity analyst Aravinda Galappatthige pointed out in a research note Monday.

“The Conservatives, who have traditionally been aggressive on telecom affordability, seem to be relatively more sanguine with no official comments made regarding lowering pricing or activating [mobile virtual network operators,]” he said. “We translate the absence of any specific policy pronouncements in this area as good news.”

He also noted that Scheer’s Conservatives seem to have a different view of how to approach the telecom sector than Stephen Harper’s. 

“While the Conservatives have been historically aggressive on the Telecom sector, this was a decade ago and we do not necessarily believe that the new generation of leadership would follow [suit],” he said. “Furthermore, even the Harper government did not entertain mandated MVNO and stuck to facilities-based principles.”

The Bloc Quebecois also included telecom and media-related issues in its platform, released earlier this month. That includes a measure for a Quebec equivalent of the CRTC, under a scenario in which the federal government would cede jurisdiction over telecom and broadcasting regulation to Quebec.

— With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

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