Heaven forbid one should touch a political third rail and use the word “tax” in the same sentence as online streaming behemoths such as Netflix.
But though it doesn’t use the dreaded T-word, that’s exactly what a new report from the Canadian Radio-television and Telecommunications Commission seems to be recommending Internet service providers, wireless companies and foreign streaming services pay to help fund production of Canadian cultural content.
And why not?
Traditional broadcasters such as Bell, Rogers, Shaw and Vidéotron already contribute 5 per cent of their gross revenues to the Canada Media Fund.
Foreign-owned streaming giants like Netflix and YouTube should not be exempted.
Nor is the CRTC the first to recommend that streaming services pay their fair share. Liberal members of the House of Commons heritage committee last year released a report calling for Ottawa to impose a 5-per-cent tax on broadband Internet services as a way to “level the playing field.”
The CRTC suggests that broadband providers make “contributions” of 1 per cent of their revenue to content. That would cost less than 50 cents on an average broadband bill of $47, says commission chair Ian Scott.
Call it what you will, but a tax by any name is even more important in light of the fact that revenues for traditional broadcasters are declining as consumers drop cable channels in favour of online services. Indeed, Netflix is now the highest-rated video service in Canada among kids and young adults, the CRTC said.
The government should listen to the CRTC and the heritage committee, and go much further by following up on a recommendation made this spring by the committee on international trade.
That group, dominated by Liberal MPs, recommended that the government levy sales taxes on companies that provide online services in Canada the same way it taxes firms that are physically based here.
The Internet giants have too long ducked paying their fair share of both content creation and taxes — and it’s costing Canadians dearly.
John Anderson, author of a study for the Canadian Centre for Policy Alternatives that called for a tax on Internet media services, says if Netflix collected HST as Canadian-owned media companies do, it would pay an estimated $89 million a year on revenues of about $685 million. And if it contributed 5 per cent of its gross revenues to the Canada Media Fund, that would mean $34.5 million more per year to make sure Canadian content is produced, distributed and promoted.
Unfortunately, the government been reluctant, to say the least, to impose taxes on the Internet content giants or require them to make mandatory contributions to the media fund.
Prime Minister Justin Trudeau promised in 2015 not to bring in a so-called Netflix tax. He wasn’t alone; all three federal parties took the same position, reflecting a popular view that anything that potentially raises the cost of access to the Internet is bad.
Indeed, after the CRTC report was released the consumer advocacy group OpenMedia came out with guns blazing. “This proposal is a disastrous idea that will raise monthly bills and force the most vulnerable Canadians off-line,” it argued.
Still, political views seem to be changing as the impact of the online services gets even larger. The NDP, for example, is changing its tune. “When you read this report, you realize that if you still want Canadian content on our screens for the coming years, everybody has to chip in,” says the party’s heritage critic, Pierre Nantel.
He’s right. It’s time the government levelled the playing field between old-line broadcasters and the new online services.