Who is proposing a Netflix tax?

Conservative Leader Stephen Harper took to Twitter Wednesday to share his favourite streaming TV series and to declare his opposition to what he called a "Netflix tax." Where did that idea come from - and is anyone actually in favour of it?

Spin Cycle | Conservative Leader Stephen Harper says he's opposed to a tax no leader is proposing

Millions of Canadians subscribe to the popular streaming service Netflix - including Conservative Leader Stephen Harper, who raised the spectre of a 'Netflix tax' in a tweet this week. (Paul Sakuma/File/Associated Press)

"Vote Harper to stop a 'Netflix Tax' #noNetflixtax"

That was the headline in an email blast sent by the Conservative Party late-afternoon on Wednesday just ahead of the first leaders' debate in Toronto tonight.

The email urged voters to reelect a Conservative government if they don't want to see a tax imposed on Netflix, a popular U.S. company that offers a Canadian version of its services allowing Canadians to watch as many movies and TV episodes as they wish for a very low monthly fee.

A video of Stephen Harper standing in front of a TV screen bearing the Netflix logo was also posted from the Conservative leader's Twitter account shortly after the email blast.

The spin

Harper who is dressed in a navy suit, blue tie and white shirt, says "Something you may not know about me is I love movies and TV shows.

"One of my all-time favourites is Breaking Bad," Harper said of the American drama featuring a high school chemistry teacher diagnosed with lung cancer who turns to a life of crime and drugs to secure a better financial future for his family before he dies. His admission drew a flurry of reaction on social media.

A grinning Harper adds, "Some politicians want to tax digital streaming services like Netflix and YouTube."

"Some have even called on us to introduce a Netflix tax. Now Justin Trudeau and Thomas Mulcair had left the door wide opened to doing just that."

"The choice is clear," Harper said. "Only our party can be trusted not to bring forward a new Netflix tax."

The counter-spin

At an NDP campaign event in Toronto Thursday, Toronto candidates appearing alongside Tom Mulcair laughed when he was asked by a reporter whether the NDP would bring in a tax on Netflix.

"I remember back in 2011," Mulcair said, "the Conservatives said they would not tax income trusts and they went ahead and taxed income trusts. They said they would never bring in an iPod tax... and they brought in an iPod tax."

"Now they're saying they are not going to bring in this type of new tax. I think Canadians have every reason to be worried based on Mr. Harper's past behaviour. Every time he promises not to tax something that's actually a clue that's something he is going to tax."

Mulcair said the New Democrats "have no plan on bringing in such a tax."

What is a 'Netflix tax,' anyway?

The Harper government raised the idea in the February 2014 budget, when it sought input from stakeholders on a new tax that would level the playing field for online vendors that complain about foreign giants such as Amazon.com, Apple and Netflix having an unfair advantage when selling digital products.

"The government is inviting input from stakeholders on what actions the government should take to ensure the effective collection of sales tax on e-commerce sales to residents of Canada by foreign-based vendors," said a paragraph from the 2014 federal budget. The government also sought input into whether it should enforce mandatory collection.

Last fall, Canada's broadcast regulator held hearings on a series of proposals that would impact the Canadian TV landscape last year. One idea was mandating online video streaming services such as Netflix to contribute into a fund that helps pay for Canadian content.

The Canadian Radio-television and Telecommunications Commission (CRTC) was hoping it could compel Netflix, with its over four million Canadian subscribers, to pay into the Canadian Media Fund, just like cable and satellite providers do.

But Netflix, which doesn't have an office in Canada and doesn't pay taxes here, argued it shouldn't have to pay into the fund since it can not draw from it. It also said that if the CRTC were to force them to pay, the costs would likely be passed on to Canadians in the form of a higher monthly fee.

In a speech to the Vancouver Board of Trade last November, CRTC Chairman Jean-Pierre Blais suggested the media was making a mountain out of a molehill, because 60 per cent of Canadians do not stream TV programming.

"Regulating Netflix is the least of our concerns," said Blais.

Michael Geist, the Canada Research Chair in internet and e-commerce Law at the University of Ottawa, wrote in March that the Ontario government was one of those making the case for a levy on Netflix. But on Thursday, the province disavowed the notion.

"Ontario is not seeking any Canadian content changes nor would we support any new regulations or tax on Netflix, YouTube or any websites," said Michael Coteau, Ontario's minister of tourism, culture and sport, in a statement Thursday. "It is irresponsible of the Harper Conservatives to intentionally mislead the public on this."

CBC/Radio-Canada was among those calling for regulation of online video services, along with other groups such as the Director's Guild of Canada, the Canadian Media Production Association and the Alliance Of Canadian Cinema Television & Radio Artists (ACTRA), as Geist wrote in blog post last year and noted in an email to CBC News Friday.

In its submission to the CRTC, Canada's public broadcaster argued "that to preserve consistency and fairness in the system, the CRTC could require over-the-top (OTT) providers... to contribute to the system in the same way as other distributors like Bell, Rogers, Videotron, and Shaw," said spokeswoman Alexandra Fortier in an email to CBC News Friday.

The rinse

While the federal NDP and Liberals have said they would like to see online providers such as Netflix disclose more revenues and subscriber numbers, they have not proposed a Netflix tax.

And neither have the Conservatives, although the Harper government has sought input from stakeholders about the prospect of levying sales taxes on digital products.

As for the NDP leader's reference to the iPod tax ... well, that was the 2011 election's "controversy" — which turned out to be much more complicated.


To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversation  Create account

Already have an account?