This August 13, 2020 photo shows a logo for Netflix on a remote control in Portland, Oregon. Netflix Inc. THE CANADIAN PRESS / AP / Jenny Kane
Tax services like Netflix could bring in $ 1.3 billion, according to PBO
The report goes on to say that consumers could change their habits if faced with higher costs
According to a new report from the Parliamentary Budget Commissioner, the government may easily underestimate the amount of revenue it could generate from taxing online services like Netflix.
As it is, overseas online services can sell their goods and services in Canada without collecting federal sales tax, leaving it up to individuals to pay the outstanding amounts to the Canada Revenue Agency.
But they rarely do.
The Liberals announced in their November economic statement that they intend to get foreign services to levy and remit taxes on goods and services or the harmonized sales tax, depending on the province.
The fall economic statement estimated that the government would generate revenue of over $ 1.2 billion in five years from this year.
The Parliamentary Budget Commissioner estimates tax revenue could exceed $ 1.3 billion over the same period.
The PBO report notes that the estimate has some uncertainties as it is based on annual company earnings reports and survey data. The office also assumed that all companies will comply with the guidelines.
The report goes on to say that consumers could change their habits when faced with higher costs for newly taxed services and switching to other digital products and services.
The report is one of two reports released today by the Office of Budget Officer Yves Giroux.
The second report estimates that the federal government will have to pay milk, poultry and egg producers $ 786 million in fiscal year 2021-2022 to compensate for lost income due to the new North American free trade agreement.
In its November spending update, the government promised to compensate producers in utility-managed sectors who had lost market share under the US-Mexico-Canada deal but failed to put a dollar figure on the pledge.
The Canadian press
Entertainment taxes
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