Ontario wants to tax YouTube, Netflix

Premier Kathleen Wynne’s government is in deep trouble. After the previous Dalton McGuinty government turned on the taps of stimulus spending during the 2008 recession — adding on tens of billions in debt for Ontario — the Wynne government has failed to close the floodgates. The provincial government is now drowning in debt. What does this debt mean for taxpayers in Ontario? You can expect to pay more.

Just the latest example of a proposed new “revenue tool” is the Wynne government’s recent suggestion for new taxes on YouTube, Netflix and other Internet video providers. Appearing before the Canadian Radio-television and Telecommunications Commission, as part of its “Let’s Talk TV” hearings, the government was loud and clear about its intent to tax Internet content. Kevin Finnerty, Assistant Deputy Minister for Ontario’s Ministry of Tourism, Culture and Sport, testified on behalf of the government, saying:

“In order to create a more level playing field, the ministry recommends decreasing this regulatory imbalance. The ministry believes the best way to accomplish this is to expand the regulation of new media TV, rather than by lightening the current regulation of traditional TV.”

That is bureaucratese for saying it’s unfair consumers have to pay taxes on their cable subscriptions, but not on their YouTube views or Netflix bills. The government also made clear these online TV providers should be forced to contribute to government coffers. The Wynne government’s call for a “YouTube tax” is in direct contradiction to the position of the feds and even the CRTC. Both have declined to step in and regulate these new content-producing sites.

In fact, what Ontario is discussing would be in direct violation of the CRTC’s net neutrality rules. But the Ontario government is desperate for cash.

One can only imagine how difficult this online tax would be to set up. It would likely require a new department in the bureaucracy to implement and it would be even more complicated to enforce. Would Ontario Internet companies have to track our web habits and charge a per view tax for watching YouTube videos? Or would we have to sign up for some sort of Ontario government approved subscription?

The Wynne government shouldn’t go down this rabbit hole.

It should resist the urge to impose a new tax on sites like Netflix and YouTube. If it is really looking to “create a more level playing field,” as it claims, it should eliminate taxes and unnecessary red tape on all digital content providers. But this isn’t about being fair or making good decisions for the economy. The Wynne government is on a tear for “revenue tools,” and they’re willing to enter new frontiers to find them.

Many consider the Internet to be the last bastion of freedom in our economy. While some politicians and bureaucrats salivate at the opportunity to tax activities on the Internet, none has been clever enough to implement them. But desperate times in Ontario seem to call for desperate tax measures. How else are they going to address that $12.5 billion annual deficit? Wynne has already ruled out any kind of spending cuts to her beloved bureaucracy.

As we speak, scores of Queen’s Park bureaucrats are scouring the economy, looking for new opportunities to hike taxes and save the government from a looming debt crisis. No business or industry is safe. Taxpayers would be wise to hide their piggy banks.

This column appeared in the September 22, 2014 edition of the Toronto Sun