Taxing Airbnb and Netflix may level the playing field, but it won’t likely change consumer habits
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“This is about fairness,” said Alana Baker, spokesperson for the Canadian Hotel Association.
“Canadian hotel operators pay corporate income tax and must charge and remit HST at the point of sale, but digital players today get a tax holiday,” Baker said.
Still, industry watchers don’t expect much to change in the way of consumer behavior, particularly when it comes to streaming services.
Kaan Yigit, president of Solutions Research Group, said he doesn’t think sales tax on Netflix will send any customers running to domestic video streaming services like Bell Media’s Crave, which already charges GST.
“Netflix has a well-defined value proposition, a very extensive and growing library, and is extremely well regarded by Canadian subscribers, with a very high 88 per cent ‘likely to recommend’ score,” he said. “Tax on it will not result in subscriber losses or churn.”
Netflix already collects and remits sales tax in two Canadian provinces, Quebec and Saskatchewan, and a spokesperson said the streaming service “will work collaboratively with the federal government on this issue, as (the company has done) previously in Quebec and Saskatchewan.”
She declined to comment on whether the amount of the tax top-up, if imposed in other provinces as expected, would be borne by consumers or whether the cost of the service would drop to accommodate it.
A spokesperson for the Canadian Association of Broadcasters declined to comment on the planned tax changes and how they are expected to affect the competitive landscape with foreign players such as Netflix and Spotify. However, he said the real win for traditional broadcasters in the government’s economic roadmap came in the form of a licensing fee waiver that is expected to provide “up to $50 million in relief” to help them stay afloat and continue providing broadcast services across the country.
