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Results: 1 - 13 of 13
View Maxime Blanchette-Joncas Profile
BQ (QC)
Thank you.
Mr. Rochon, as I was just saying, in your speaking notes this morning, the third measure caught my eye. You said that individual property owners were renting out their homes or cottages through digital platforms, and that the government is proposing to apply the GST/QST to these individuals by 2023. It's staggering to be so proactive in going after money from taxpayers, when the GAFA companies have been a problem for years.
I would also refer you to a press release about the Coalition for Culture and Media, which welcomed Canada's decision to finally collect the GST for goods and services purchased over the Internet as of July 1, 2021. They have been asking for this for three years.
Quebec has been taxing Netflix for almost two years now and has also been taxing Amazon and Facebook. The province has therefore forged ahead, while the federal government, is still dragging its feet. How do you explain that?
Paul Rochon
View Paul Rochon Profile
Paul Rochon
2020-12-03 11:35
As you know, these are government decisions. My role is to explain the policy decisions made by the government, and I believe your question should be put to a minister rather than to me. That's because it addresses questions that are essentially political.
View Alexandre Boulerice Profile
NDP (QC)
Thank you, Mr. Marsland.
I fully agree with that, but would like to come back to the question I tried to ask earlier.
How are you going to, very concretely, require businesses like Apple or Amazon to charge the GST? Which companies will be included as of January 1 in the measures requiring the application and collection of the GST? Will these measures apply only to retail trade or will they also include foreign vendors that deliver digital content, like Netflix?
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-12-03 12:01
Perhaps I could answer that question by referring to the experience of other countries.
I'll begin with the work done at the OECD over many years to develop a framework, a common framework, to do this. That framework is the one that the government is proposing to follow with respect to non-resident businesses such as the examples you gave. That framework has been applied in other jurisdictions, and the experience has been that there's been a high degree of compliance.
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-12-03 12:02
It is probably for good business reasons that businesses choose to comply with these requirements, but in the absence of voluntary compliance, then I think there will be steps taken to try to ensure compliance, in partnership with other countries.
View Philip Lawrence Profile
CPC (ON)
Thank you very much, Madam Chair.
I'd like to start by thanking all the witnesses for taking the time to be here today. I really appreciate it. I know that you're all very busy, especially given the pandemic.
My first question will be addressing primarily the CRA and perhaps the auditor and the CBSA as well, but primarily the CRA. The auditor's report highlights the fact that most Canadians are not self-reporting the HST and GST on digital purchases. I believe the number was 548. I want to meet those 548, first of all, because those might be the most honest Canadians we have.
It suggests that the digital giants should be the ones reporting and remitting on behalf of Canadians, as is done in many other places in the world. However, there appears to be an underlying belief or an assumption that it will be the digital giants that will be forced to pay this money and that Canadians will get their fair share from these digital giants. There's no evidence presented in the report or elsewhere that says this money will actually come from international corporations and not the pockets of Canadians.
Indeed, in 2018, the Prime Minister went so far as to say this:
The reality is that taxpayers will be the ones to pay those taxes. We, on this side of the House, [that's the Liberals, not us] promised not to raise taxes for taxpayers who are already paying enough for their digital subscriptions and Internet.
I'd like to raise this for both the auditor and the CRA. Do you agree or disagree with the statement from our Prime Minister?
Bob Hamilton
View Bob Hamilton Profile
Bob Hamilton
2020-11-17 11:26
Thank you for the opportunity, Chair.
On the question of getting large suppliers to register in Canada to collect and remit the tax, that's not something that's in the legislative framework now, so what we are doing in the absence of that is working to encourage people to know what they are supposed to do and to educate about the obligations under the tax act. In some other world, where other jurisdictions do this, were we to force the foreign supplier to register and remit, we would come up against the issue you've raised.
What I would say in the area of sales taxes is that economists can debate how they get shifted or not shifted, whether they're passed along in the price or whether they're absorbed by the provider. It's a bit of a theoretical question right now, given that we don't have such a regime, and then probably, obviously, market conditions will dictate the extent to which taxes are passed along versus absorbed.
From our perspective at the CRA what we are interested in doing is looking at the current legislative framework and finding a way to make the system work in a way that's fair, and, as you can see in the comments provided by the Auditor General, as this grows in importance, just making sure that we are paying adequate attention to it and monitoring and tracking. Those are a couple of the key recommendations that have been put to us, and we've made good progress on those and we're almost there.
View Philip Lawrence Profile
CPC (ON)
Thank you very much for that.
So there is no one at this committee who has evidence that the Netflix tax or the digital giant tax will actually come from those international giants and not from Canadian taxpayers. During a pandemic, if we were to change the legislation to allow for the taxation of international digital giants, we don't know whether that would come from the pockets of Canadians or from digital giants. Is that correct?
Paul Rochon
View Paul Rochon Profile
Paul Rochon
2020-11-17 11:28
Madam Chair, could I perhaps comment in general terms on the question?
We normally expect, in competitive markets.... The situation we're discussing here is that the tax actually applies, but it's just not being administered. In highly competitive markets, one would expect the application of the tax to be absorbed in the margins of corporations. In other circumstances, where the corporation has the ability to adjust prices, you'd normally expect the tax to be passed on. You'd need to really look at specific circumstances.
View Philip Lawrence Profile
CPC (ON)
My apologies, time is short.
If at least a portion of that or part of that tax on the digital giants is passed on to consumers, do the wealthy pay more for their Netflix subscriptions than does the middle class or even those who are economically challenged?
I would ask that of the deputy finance minister, if he would be so kind.
Paul Rochon
View Paul Rochon Profile
Paul Rochon
2020-11-17 11:29
I actually don't have data per se on the incidence of Netflix consumption by income. We have various aspects of our tax to try to deal with progressivity, notably the progressivity of our income taxes, as you know well.
View Philip Lawrence Profile
CPC (ON)
Perfect.
Once again, in perhaps an unprecedented move, I'm going to build on my NDP colleague's earlier questioning. With respect to the digital giants, because of the lack of legislation and lack of movement in the last five years, we understand that at least a portion of those funds that should be ours as Canadian taxpayers to protect our tax base are not being gathered. My question is related to that. As opposed to the digital giants, which are not currently paying any interest on penalties on monies that really should be the Canadian government's, how much on a daily basis are Canadians currently paying, during a pandemic, on taxes and penalties every day to the CRA?
Bob Hamilton
View Bob Hamilton Profile
Bob Hamilton
2020-11-17 12:20
I'll have to get back to you with a specific number on interest and penalties during the pandemic. I certainly don't have that at my disposal.
As we talk about these issues, one of the things that we try to keep in mind here—and as we discuss it internationally—is differentiating between the types of transactions. We've talked about goods coming in, digital services and digital giants, so I think it's important to parse these and understand the components. I'll do my best to find the numbers that were referenced.
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