The Digital Services Tax Is the New Reason Our Neighbour Is Angry ⇥ cbc.ca

John Paul Tasker, CBC News:

U.S. President Donald Trump says he’s ending all trade discussions with Canada to hit back at Ottawa for slapping a tax on web giants — and he wants it removed before negotiations can begin again.

His objection is, ostensibly, about its apparent targeting of companies based in the United States. This is a very silly complaint. The U.S. seized the heart of the tech economy and, instead of cooperating with others, used it as leverage around the world. That is one reason for its unrivalled dominance in the industry. Any tax on tech companies will disproportionately affect U.S. businesses, but they have been exerting disproportionate influence around the world for decades.

Brendan Ruberry, Semafor:

Canada’s 3% digital services tax went into effect last year, but its first payments are due Monday, with US companies expected to shell out nearly $2.7 billion. Trump said US tariffs on Canadian goods would be applied within the next week. Last month, the US and UK agreed [to] a trade deal despite Westminster enacting a 2020 digital services tax.

This is just the latest thing our hostile neighbour can use to try and make us crack. If there were no tax, there would be something else to complain about, because we are not dealing with a reasonable administration that wants mutually beneficial trade arrangements.

As far as I can see, this tax makes sense. Unlike the Online News Act, which requires large platforms to pay for some traffic they send elsewhere, this act is specifically about revenue extracted from Canadians by businesses that are only beginning to see antitrust regulation.