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Intellectual Property

Time to tax digital streaming services: Fisher

The federal government is missing out on a lucrative revenue source by failing to tax over-the-top (OTT) media services, says Toronto intellectual property lawyer Kevin Fisher.

Commenting on a Toronto Star story that reports digital streaming services have not been asked to collect GST or relevant provincial sales taxes, Fisher, partner with Gardiner Roberts LLP, says it’s time to start.

“It’s a no-brainer from a policy perspective. The government is overturning rocks and trying to squeeze more tax out of the same people, and they’re ignoring an entire industry,” he tells AdvocateDaily.com. “It’s becoming huge. They are not imposing the same rules as they do on everybody else.”

A report by the auditor general released last month states that in 2017 alone, Ottawa lost $169 million in GST revenue because streaming companies were not forced to collect taxes, the Star says.

Fisher says it doesn’t make sense on many levels.

“First of all, it puts traditional businesses at a disadvantage because they’re obviously paying and collecting the taxes where these other entities are not, and therein lies the dilemma,” he says.

While the Star reports there has been little movement at the federal level, a legislative review panel is hearing submissions looking into broadcasting and telecommunications laws, including taxation. An interim report is due this month, the newspaper reports, but final recommendations will not be ready until January 2020, well after the federal election in October.

Fisher says the government is “kicking the can down the road” instead of making a decision.

“They don’t want to deal with the politics of it. Maybe they feel it’s an election issue that could be used against them if they are taxing your streaming services,” he says. “I think it’s been at least two years since the government started looking at this and still nothing has been done, and it doesn’t seem to me that it’s a sophisticated problem.”

Fisher says, in the early years when these were nascent technologies, it made some sense to see where it was going and if it was a service that could be taxed.

“But now they’re fast becoming the dominant players in their respective areas, and it seems to me we hear every day about a new player in the market,” he says.

Fisher says the competition traditional broadcasters face is one thing, “but it’s even worse if they are put in an unlevel playing field by government policy.”

He says he doesn’t agree with the argument that OTT services are not traditional broadcasters and thus should be tax exempt.

“If it walks like a duck and quacks like a duck, it’s a duck. It may be that the definition of broadcasters has changed, but it’s still telecommunications. They’re conducting business in Canada, and they are providing a good or service.”

In the end, Fisher says it comes down to fairness.

“I’m surprised that traditional broadcasters are not making a larger issue of it both publicly and privately,” he says. “One wonders why more attention isn’t being devoted to this particular issue. It’s just bad policy and an unfair one in the way it’s being applied.”  

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