Elbows up, everybody!:
U.S. President Donald Trump suspended negotiations with Canada over the tax on Friday. Following a phone call between Carney and Trump on Sunday, Ottawa announced that it was eliminating the tax.
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The announcement from Finance Minister Francois-Philippe Champagne came late Sunday evening, following a phone call between Prime Minister Mark Carney and U.S. President Donald Trump. ...
The tax was announced in 2020, but the legislation to enact it didn’t pass until last year. While it has been in effect for a year, the first payment, retroactive to 2022, was to be submitted on June 30.
The government intended it to overcome what Canada saw as a tax loophole, with big tech companies operating in Canada digitally, making money off Canadian users and data, but not paying tax on it in Canada.
The tax was to apply to companies that operate online marketplaces, online advertising services and social media platforms, and those that earn revenue from some sales of user data.
It meant companies such as Amazon, Google, Meta, Uber and Airbnb, would pay a three-per-cent levy on revenue from Canadian users.
(Sidebar: READ - costs passed on to the consumer.)
The tax was only to cover large companies, those that have worldwide annual revenues greater than 750 million euros per year and Canadian digital services revenue greater than $20 million per year. The parliamentary budget officer had estimated it would bring in $7.2 billion over five years.
Because the first payment was retroactive to cover three years, the expectation was the companies collectively could be on the hook for an initial payment of around US$2 billion. ...
Critics of the tax took issue with Canada’s refusal to wait for a global deal. They also opposed the retroactive application of the tax, which means companies will have to pay several years’ worth of taxes at once.
U.S. businesses and politicians argued the tax targets U.S. companies. The tax applied to all large tech companies no matter where they were based, but because so many of those companies are American, U.S. firms would have paid the bulk of the money.
In a letter earlier this month, 21 members of Congress said U.S. companies will pay 90 per cent of the revenue Canada will collect from the tax, and that first payment will cost U.S. companies US$2 billion.
Trump looked after his country's interests which is what he is expected to do.
Carney, carrying on from the village idiot's bad law, expected the shakedown to proceed so that he can fund the CBC and other news agencies no one cares about.
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If this sounds familiar, it is because the Canadian government misreading the tech sector has become a hallmark of its policy. Talk tough, practically dare companies and foreign governments to respond, and then frantically seek an exit strategy when they do. This was the case with the Online News Act and Meta’s blocking of news links, with the government’s AI regulation which new Minister of AI Evan Solomon says will not be re-introduced, with the online harms bill, and now with the DST.
Unfortunately, this misreading does not end there. The Bill C-2 lawful access provisions create significant new costs and scope in surveillance requirements that may place Canadian and foreign companies into legal quagmires where they cannot comply with both Canadian and U.S. laws. The opposition to the bill will grow in the fall until the government tries to find a way out. Further, last week, the government released a joint statement with the European Union that says Canada and the EU will “align our frameworks and standards in the regulatory field, to make online platforms safer and more inclusive, to develop trustworthy AI systems and to establish interoperable digital identities and digital credentials to facilitate interactions between our citizens and our businesses.” This suggests more of the same on online harms, AI regulation, and speech regulation.
There is a need for smart tech regulation in Canada. Unfortunately, the government has too often viewed tech primarily as a source of revenue for policy projects – the proverbial “make web giants pay” – while overestimating the attractiveness of the Canadian market and underestimating the risks of costly regulation. Canada desperately needs a tech regulation reset. Perhaps the embarrassment of walking away from $7 billion will provide the wake up call.
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Mark Carney has decided to put Canadian auto jobs, manufacturing jobs, and the whole steel and aluminum industry at risk over a yet-to-be implement tax. It’s a foolish move for the Liberals from both an economic point of view and from a negotiation standpoint.
On Friday, Donald Trump announced that trade talks with Canada, the ones to try and ease the tariffs, were off. The reason, Carney’s insistence on pushing ahead with a Digital Services Tax that comes into effect next week.
It will require big tech companies like Apple, Uber, Amazon and others to pay 3% of their revenue from Canada — that’s revenue, not profit — to the Canadian government. It also comes with a retroactive payment of roughly $3 billion for the American tech companies to cover the period going back to 2022.
The bill imposing this legislation and the retroactive payments to 2022, only passed Parliament on June 20, 2024.
No wonder President Trump calls this legislation unfair. Trump, like Biden before him, has been asking us to drop this tax, which both sides in America believe violates CUSMA, and we have refused to budge so now, he’s walking away from talks. ...
The Carney Liberals, much like the Trudeau Liberals refuse to listen to the Americans when they have issues with us on trade, but we expect them to listen to us. The Liberals seem to think this is a one-way conversation where we talk, they listen, and we get what we want.
I’ve been hearing for months that we haven’t caved on the DST because we are holding out to get something in return for dropping it. The tax comes into effect Monday, we have refused to drop it and we have gotten nothing in return.
This isn’t a Mark Carney elbows up moment; this is a complete and utter failure that anyone paying attention could have predicted.
The entire bill is a shakedown, one that the credentialed Carney should have seen through and disposed of.
But no.
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