The Globe and Mail reports in its Saturday edition that Quebec is on the right track in seeking to apply its provincial sales tax to Netflix. The Globe's Barrie McKenna writes that the tax system has fallen badly out of step with the digital economy -- not just in Canada, but around the world. Downloading songs from iTunes or purchasing vinyl at a store is still buying music. The same applies to streaming a movie or going to the theatre or using Uber rather than hailing a cab.
You pay sales tax on Bell's Fibe TV, Rogers cable service or an on-line subscription to The Globe.
So why are foreign-based services such as Netflix, iTunes and Spotify getting a free pass? Initially, regulators and policy makers bought into the argument that taxation would cripple the economy by stifling nascent technology and slowing the spread of the Internet. That rationale just does not cut it now that the Internet is ubiquitous and hugely profitable.
Another frequently cited reason for not taxing foreign streaming services is that forcing offshore companies to collect sales tax would be too difficult. Difficult -- but not impossible. Japan, South Korea, Australia, New Zealand and South Africa all tax on-line services.
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