Justin Tang The Canadian Press Federal Finance Minister Chrystia Freeland tabled the ways and means motion on Tuesday which includes proposed legislative changes to implement key measures from the economic statement presented last week.
The government of Justin Trudeau avoided including in the implementation document of its economic statement the deadline of January 2024 to begin to impose the digital giants, in a desire not to offend the Americans, indicates a government source.
This deadline at the beginning of next year has nevertheless been mentioned publicly for months by the Minister of Finance, Chrystia Freeland.
The one who is also Deputy Prime Minister tabled the ways and means motion on Tuesday which includes legislative changes proposed to implement key measures of the economic statement presented last week.
Once this motion is adopted , the Liberals will be able to table a bill containing the same elements, including provisions concerning a possible Digital Services Tax Act.
This latest piece of legislation has been promised by the Liberals for years. It is presented as a way of forcing digital companies established abroad that benefit from income in Canada to do their part by subjecting them to a 3% tax.
Questioned about the fact that the he January 2024 deadline is not found in the document of more than 500 pages that she presented on Tuesday, Ms. Freeland affirmed at a press briefing that “the position [of the] government is unchanged.”
Negotiations are underway, on the international scene, with the Organization for Economic Co-operation and Development (OECD) as well as the G20 countries on the establishment of a multinational framework called, in the jargon, “pillar one”. .
Ottawa could, however, decide to move forward on its own, as Ms. Freeland has already suggested.
“Our government’s position has always been […] that we have a preference for a multilateral agreement,” the minister said on Tuesday. She added, in the same breath, that if things do not move as planned by the end of the year, “Canada will have no choice but to introduce its own digital services tax.”< /p>
“Additional flexibility” vis-à-vis the United States
A government source familiar with this issue affirmed that we should not see “a setback » in the absence of a deadline written in black and white in the ways and means motion, ensuring that the “desire to move forward quickly” remains.
This source spoke on condition of anonymity in order to speak more freely. She indicated that there is no mention of a date in order to add “additional flexibility” in Canada's discussions with the United States, or even to avoid certain repercussions that could be imposed by the administration of Joe Biden.
For her part, Ms. Freeland declared that “nothing is stopping” Ottawa from moving forward unilaterally, without the prior consent of the American Congress.
“It’s really about fairness,” she said. She pointed out that several governments elsewhere in the world already collect a digital services tax in their own jurisdiction.
“This tax […] helps make essential investments in their countries and it is not “just not fair for Canadians to be deprived of this revenue,” the minister continued.
Her MP colleague Sophie Chatel, who worked with the OECD, added in an interview by affirming that “each year” which passes without taxation is equivalent to “income which is lost”.
She noted that the OECD has pushed back the timetable for the entry into force of “pillar one” several times.
“Meanwhile, countries like the United Kingdom, France, Italy, Spain, Austria, Turkey take revenue from the digital economy, but not Canada,” summarized the former tax expert.
The Americans were “reasonable”
The Liberal elected official for the Pontiac riding explained that the intention is to move forward in the “interim” with a Canadian law, it is that is to say while waiting for the arrival of a “multilateral convention” from the OECD aimed at responding to the realities of more than a hundred countries.
“It is really clear that the desire is to arrive with a multilateral agreement in which key players like the United States are an integral part of the solution to restore the integrity of our international tax system. This is ideal. »
As for the concerns of some that the Joe Biden administration could sanction Canada because of its possible Digital Services Act, Ms. Chatel tempers it by providing nuances.
Facing other countries that moved forward, she argued that the United States deemed the measure “sanctionable” but decided to put any sanctions on hold “until we put implements pillars 1 and 2 of international tax reform.”
“So I think it was still a reasonable approach by the United States, and I hope that Canadians will not have not different treatment [from] other countries,” concluded Ms. Chatel.
During a technical briefing for media, Government of Canada officials noted that it is not new that no dates appear in elements of the Canadian legislative proposal. It was argued that it will be up to the Council of Ministers, by means of the adoption of a decree, to set the date of entry into force of the possible law.
Tax credits, GST exemption
The motion presented Tuesday by Ms. Freeland had to be adopted before the bill including the provisions included therein could be tabled by the Liberals. The range of promised measures can only be implemented once royal assent has been obtained.
In addition to the provisions for taxing digital services, there are other measures promised in the economic statement, such as sick leave in the event of miscarriage and a withdrawal of GST on psychotherapy care.
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There are also proposed amendments to the Competition Act. In the past, the Liberals have put forward such modernization as a way to stabilize the effect of the rising cost of living among consumers, particularly at the grocery store.
“We knows that more competition translates into more options for consumers, which obviously promotes better prices,” argued Tuesday the Minister of Industry, François-Philippe Champagne.
< p>The bill implementing the economic statement, which the federal government hopes to formally present to the House of Commons on Wednesday, will also include measures for the establishment of tax credits for investments in clean technologies. These incentives have been announced by Ottawa for a long time.
Once they become a reality, these tax credits must be retroactive to March 28, 2023. A credit for carbon capture and storage must be made accessible , retroactively to January 2022.