The government’s intention to tax big tech is positive but that it will be challenging to fit many promises in one piece of legislation, critics say, adding that there is a lot riding on Justin Trudeau’s proposals to tax big tech giants.
The government suggested in its throne speech coming legislation or new regulations for companies like Facebook, Google, Apple, Twitter, and Netflix.
“Web giants are taking Canadians’ money while imposing their own priorities… Things must change, and will change,” Governor General Julie Payette read in the speech.
But Trudeau’s government has touted the idea of reining in tech giants since before the 2019 Federal Election, New Democrat MP Charlie Angus said, adding that it’s time the government did something.
“The digital giants have not been paying anywhere close to a reasonable rate of tax in Canada and that’s a problem. We’re seeing the Liberals now acknowledge that, but they’ve acknowledged that many times and have done nothing on it. I think they’re deeply in awe of the power of Silicon Valley to the detriment of Canada,” he said in an interview.
Angus noted that taxing big tech would mean being able to reinvest in Canada and put money into projects that benefit local companies. That could mean reinvesting in digital startups or supporting Canadian entrepreneurs or artists.
Conservative MP James Cumming, who is the innovation shadow cabinet minister, said in an interview that it was hard to comment on something when the Liberals had yet to put out any kind of legislation.
“From a principle basis we want to see tech companies pay their fair share, but we also don’t want to discourage investment and access to information and to the services that Canadians would see,” he said.
“Technology is changing all the time and from my perspective, it looks like the Liberals have just been postponing the problem.”
Liberal MP Nathaniel Erskine-Smith, who sits on the industry committee, said in an interview that the government was committed to creating legislation and that there were three areas the government is focused on. That includes creating a revenue tax based on what the Organisation for Economic Co-operation and Development (OECD) has recommended, a fair share of revenue between big tech and news media outlets, and ensuring that digital platforms are paying towards creating Canadian content.
In May 2019, the government announced the Digital Charter, a 10-point principled plan to guide policy on future legislation of digital platforms; it did not include specific regulations.
Trudeau’s 2019 election platform suggested imposing a three per cent tax on the revenue generated in Canada by large technology companies through online advertising by collecting Canadian user data.
Heritage Minister Steven Guilbeault has also suggested introducing legislation targeting streaming services and possibly forcing social media giants like Facebook to pay news outlets for content.
Tackling big tech in legislation will be difficult, long “overdue”
Rohinton Medhora, president of the Centre for International Governance Innovation (CIGI), said in an interview, that while news of the government intending to introduce legislation is positive, it was “overdue.”
“It almost left us thinking, what took us so long to get to this space, but I’m glad we’ve gotten to this place,” he said, adding that the Liberals are going to have a challenging time trying to fit so many promises in a single legislative act.
“You’re never going to tackle any big complex problem through one piece of legislation only,” Medhora said. “In other words, not everything could be in one big bill this fall. Moving from a piece-by-piece provincial approach to taxing streaming services to a federal approach is a fairly straightforward thing that could be done. But then you’ve got complex things like the revenue tax.”
He noted that one main issue that has crippled the government when trying to enforce legislation on tech giants is that they’re too powerful. However, he noted that change is possible “if enough countries wake up and do it jointly, then companies do have to sit up and listen.”
Ben Bergen, executive director of the Council of Canadian Innovators, said in an interview that the government shouldn’t impose a tax if it’s for the purpose of a short-term goal to pay for social programs.
“The real focus should be, how do we create a prosperity strategy using innovation as a way to actually tax and pay for programs we as Canadians care about?” he said.
More recently, the CCI released a report highlighting eight recommendations from the tech sector on how to give a boost to Canada’s economy. Bergen highlighted at the time that Canada needs to reconsider its approach to foreign direct investment in the innovation sector as part of that COVID-19 recovery plan.
He said ultimately the CCI will pay attention to how the country spends money on technology infrastructure.
“The government is going to be spending billions of dollars on infrastructure, so we’re looking at those procurement models. Where’s that technology coming from? Is it coming from domestic innovators? Or is it coming from foreign firms?”
“That’s really where companies are able to thrive and grow, is when they get a purchase order. If you look at South Korea or some of the Nordic countries, they’re really good at playing in these spaces by supporting domestic building capacity and then ultimately selling those products globally,” he said.