One of the three bad laws passed in the Trudeau era is getting rescinded: the Digital Services Tax.
If you are broadly a supporter of digital rights in Canada, the majority of the Trudeau government basically represented the dark ages. There’s the still looming threat of the Online Streaming Act for online content creators, the ongoing destruction of journalism through the Online News Act, and, of course, the Digital Services Tax which threatens to further jack up the costs for Canadians across the board.
Unsurprisingly, the US has long been unhappy with Canada seemingly taking a head in the sand approach to all of this. When pressed about the trade violations all of these represent, the governments response has long been ‘see no trade violations, hear no trade violations, say no trade violations’. As such, whenever people ask about the ongoing threat of trade retaliation from the US (which extends into the Biden administration), the government either ignores such questions or responds with a deer in headlights look along with a blanket ‘it’s all in line with our international trade obligations’ – as if saying that makes all the legal problems go away on their own (which it doesn’t).
As if to punctuate the point us experts have been warning about, Trump followed through on those threats with, among other things, signing an executive order targeting the Digital Services Tax, issuing retaliatory tariffs on the Digital Services Tax, listing the Digital Services Tax as a trade barrier, and even at one point ending trade talks over the Digital Services Tax. It really was a moment where the Canadian government was in dire need of getting a clue about this whole thing.
While the US government had spent the early part of the year relentlessly beating the Canadian governments head with the obvious stick, it seems that the last bit finally got the Canadian government to pay attention to this issue. In response, the Canadian government said that in exchange for resuming trade talks, they would rescind the Digital Services Tax.
Now, one of the really dumb things about all of this is the fact that the Digital Services Tax was sold as a way for foreign platforms to “pay their fair share”. Specifically, the claim goes, that it would be the platforms that pay these taxes into the ecosystem, not costing Canadians money. It’s about as stupid as saying that it’s foreign governments pay for the tariffs. At the risk of insulting your intelligence, taxes don’t work that way. Companies pass taxes like that onto consumers. That has happened with things like the Harmonized Sales Tax (HST), the Provincial Sales Tax (PST), and Goods and Services Tax (GST). All you really needed to do was look at a receipt to prove the point. So, this whole idea that large platforms have been handsomely profiting off of Canadians and the Digital Services Tax was an incredibly stupid argument from the very beginning. As if to further prove the point, an announcement was made that when the Digital Services Tax is getting repealed, Canadians would get a refund on top of it all.
At this point, Canadians have been waiting for the formal rescinding of the Digital Services Tax. Well, as it turns out, if you were watching the news about the federal budget, you were indirectly watching a debate about the formal rescinding of the Digital Services Tax.
Indeed, the Budget Implementation Act was basically a foregone conclusion from the beginning and hardly newsworthy. The government was tabling the budget knowing full well that it was going to pass. In fact, prior to the tabling, Prime Minister, Mark Carney, openly said that opposition parties were going to conveniently have members go to the bathroom on the day of the vote to allow it to pass. This is because no one, apart from the mainstream media, wanted an election.
Of course, mainstream media is going to mainstream media. They spent the last several days excitedly “reporting” that Canadians were all but headed to the polls so early into the mandate. It got to the point where it was almost a challenge they were taking up of seeing how many times they could say “election” in their reports. They fully knew that the odds of that happening were incredibly remote, but they tried acting as though there was severe doubt about the inevitable outcome. On the day of the vote, mainstream media was screaming about “drama” about whether or not an election was going to happen even though there was virtually no shot that the election was going to happen.
Well, the vote happened and the obvious thing happened. Multiple opposition members abstained and the budget passed. Probably the only remotely surprising thing was Green Party leader, Elizabeth May, voting for the budget. In response, the mainstream media spent the day going on and on about how razor thin it all was, as if o one could’ve seen this highly predictable outcome. Seriously, mainstream media needs to take a freaking chill pill.
while members of the mainstream media were acting like idiots over all of this, there were actually interesting details about the budget. One was the fact that Carney was cramming AI into everything, assuming the AI hype was real (insert facepalm here), and saying that this would save money.
Another part, however, was the formal rescinding of the Digital Services Tax. That provision can be found here and it reads as follows:
Digital Services Tax (Repeals and Other Measures)
Repeal
126 (1) The Digital Services Tax Act, section 96 of chapter 15 of the Statutes of Canada, 2024, is repealed.
(2) Subsection (1) is deemed to have come into force on June 20, 2024.
Repeal
127 (1) The Digital Services Tax Regulations, section 97 of chapter 15 of the Statutes of Canada, 2024, are repealed.
(2) Subsection (1) is deemed to have come into force on June 20, 2024.
Transitional Provisions
128 (1) If a person has, before the day on which this Act receives royal assent, paid an amount to His Majesty in right of Canada and the amount, in the absence of section 126, would have been taken into account by His Majesty in right of Canada as tax, a penalty, interest or other amount under the Digital Services Tax Act, the Minister of National Revenue must refund to the person the amount, together with interest on the amount at the rate determined under paragraph 2(1)(a) of the Interest Rates (Excise Act, 2001) Regulations, for the period beginning on the day on which the amount was received by the Receiver General for Canada and ending on the day on which the refund is paid.
(2) Any refund payable by the Minister of National Revenue under subsection (1) is to be paid out of the Consolidated Revenue Fund.
So, for one, the Act is getting rescinded and for another, Canadians charged under this are getting refunded.
Obviously, this bill is effectively “must-pass” legislation. So, unless someone tables an amendment that strips this section out, then it is basically on the chopping block at this point. For those who are curious, you can follow the bills progress here.
The Digital Services Tax should never have been passed like this. It caused so many problems after being passed on false promises. It was one of three bills that basically represented the government scoring own goals. Now, Canadians can breathe a sigh of relief knowing one of these digital legislative abominations is on the fast track of getting removed from the law books.
(Via @MGeist)
