Canadian Government Enacts Digital Services Tax

Peter Zimonjic, CBC News:

The federal government has enacted a controversial digital services tax that will bring in billions of dollars while threatening Canada’s trading relationships by taxing the revenue international firms earn in Canada.

This has always seemed to me like a fairer response to declining Canadian advertising revenue for media companies than the Online News Act’s link tax. It makes no sense to charge ad-supported platforms for the privilege of pointing users to specific URLs.

U.S. Ambassador to Canada David Cohen issued a media statement Thursday calling the tax “discriminatory.”

“[The United States Trade Representative] has noted its concern with Canada’s digital services tax and is assessing, and is open to using, all available tools that could result in meaningful progress toward addressing unilateral, discriminatory [digital services taxes],” Cohen said in the statement.

I would love to know if it is possible for any non-U.S. government to respond to any number of unique conditions created by massive technology companies without it disproportionately impacting U.S.-based firms. The U.S. spent decades encouraging a soft power empire in the tech industry with its lax competition laws, and it has been an immensely successful endeavour. There will likely be retaliation, which is a similar reflection of its power — the Canadian government can either allow advertising spending to continue to be eaten up by U.S. firms, or it can get hit with some tariff on something else. Like sleeping with an elephant.