Canada’s Prime Minister Justin Trudeau has rejected a proposal to apply a 5 percent tax to broadband internet services, the CBC reported Thursday. The proposal was included in the majority report by the Canadian Heritage parliamentary committee, and was intended to help fund Canadian content, a perennial issue in the U.S. neighbor.
The so-called “Netflix tax” would have raised hundreds of millions of dollars for the Canadian Media Fund, according to the report, in addition to the revenue the fund receives from cable television bills. The tax would apply to “broadband internet providers,” but not more inexpensive, basic service plans, and therefore is being called a streaming tax, rather than an internet tax, by some.
Committee members from the opposition Conservative Party declined to endorse the plan, though a source told the Globe and Mail that members of parliament from all parties on the committee acknowledged the need for the fund to boosted as local content, including news, dwindles. A recent survey by J.D. Power found that only 73 percent of Canadian cable television subscribers plan to keep their service for 12 months or longer, as streaming service become more popular. Former Canadian media executive Richard Stursberg told the Globe and Mail that Canada’s Supreme Court has already ruled against additional taxes on ISPs.
“We respect the independence of committees and Parliament and the work and the studies they do, but allow me to be clear: We’re not raising taxes on the middle class, we’re lowering them,” Trudeau told a crowd in Montreal, according to the CBC. “We’re not going to be raising taxes on the middle class through an internet broadband tax. That is not an idea we are taking on.”
Among the 20 other recommendations in the report are allowing media companies to deduct spending on advertising on Canadian platforms from their taxes, creating a tax credit for print publications making digital investments, and forcing the national broadcaster to eliminate advertising on its digital products.
Chicago instituted a controversial tax on streaming entertainment in 2015, which is facing a court challenge, and Illinois is considering doubling down with one at the state level, the Chicago Tribune reports. The U.S. Congress passed a permanent ban on internet access tax in 2016.