Canadian Heritage Committee on Nov. 2nd, 2017

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Clarke. Yes, your seven minutes are up. I'm sorry.

We will go to Monsieur Nantel.

It's so nice to see you again, Monsieur Nantel.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you, Madam Chair.

It is always a pleasure to see you, Ms. Joly, Ms. Roy and Mr. Flack.

Ms. Joly, if I may, I would first like to ask your deputy minister to clarify a few points.

Mr. Flack, is it correct that, in a briefing note in June 2016, you informed the minister that many countries have already tailored their sales taxes so that they apply to online products and services like those offered by Netflix?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Thank you for your question, Mr. Nantel.

First, I want to take a few minutes to clarify the matter of the investment in this country that Netflix has decided to make.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

I am not talking about any of that. I am asking a very specific question about the sales tax being applied to one cup of coffee and not to another

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Madam Chair, I want to finish answering the question.

Essentially, there were no discussions with Netflix about a tax exemption and there never have been any discussions about that issue. It was not part of the agreement.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Good job too.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Nor were there any discussions about the platform nor with the investor about the fact that we were never going to pass any legislation about digital platforms.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

I do not consider that to be an answer, Ms. Joly. You can well imagine that I have a lot of questions to ask.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I would like you to stop interrupting me when I am speaking.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

It would be nice if you would answer my question.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I wanted to share those two small matters with you before my colleague replied.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you. That's great.

Mr. Flack, did you or did you not inform the minister that many countries had already tailored their sales taxes?

[Graham Flack]

Just like the report of this committee, the note mentions that, since it was established, the sales tax in Canada does not apply to international companies selling services in Canada.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

But the note says that other countries have done so.

[Graham Flack]

Yes. That is the first point.

Some countries have recently implemented a form of sales tax that applies to those platforms, but the work at international level is still going on.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

In the same note, you also told her that not applying the goods and services tax, the GST, on services like the ones Netflix offers would result in a loss of revenue for the government, and that it would be also be an unfair advantage in competition for local suppliers. Is that correct? Did Mr. Morneau also receive that information?

[Graham Flack]

The note, and Canada's fiscal policy are the responsibility of the Department of Finance, not the Department of Canadian Heritage.

The note and the committee report mentioned that, in general, it is not just cultural products that the GST does not apply to, it does not apply to digital products from foreign companies either. The result is that those companies do not pay taxes.

However, as this committee has recognized—

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

I have to move to another topic because I know what you are going to tell me. I know that there are complications, but it is being done. You said so in the briefing note.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

If I may, Mr. Nantel, I must emphasize that I introduced a cultural policy, not a tax policy.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Sure, let's talk about your cultural policy.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

The cultural policy calls for investments of $2.2 billion at the moment and a transition plan that includes an agreement with a foreign investor, but also…

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Unfortunately, Ms. Joly, I cannot allow you to use up on my time in this way. This is unfortunate.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

…a reform plan. It really is important to reform our legislation to protect and promote our culture in the digital age.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

You have my sincerest wishes for that. You know how much I agree with you about it. I have the same hopes and desires for our culture.

This committee spent 18 months studying those matters and one of its recommendations was to ask internet service providers for a contribution from their revenues. On the same day the report was tabled, your Prime Minister offhandedly dismissed the solution, and you did the same. Even Gerald Butts felt the need to apologize to certain members of this committee.

Had you read the report that day, when you dismissed it out of hand? Or was it a sudden burst of inspired improvisation?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

We have always said that we are opposed to taxing internet service providers. Are you telling me that the NDP is in favour of increasing taxes for those providers and of increasing—