Evidence of meeting #83 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was e-commerce.
A video is available from Parliament.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
On that television program, you said that Quebec's retail council, the Conseil québécois du commerce de détail, has indicated a loss of $1.3 billion. Where does that figure come from?
Chief Executive Officer, La Maison Simons Inc.
Honestly, I don't know where the retail council got that figure. I don't know the source.
October 25th, 2017 / 3:55 p.m.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
We should have invited someone from the council so we could ask them.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
You said there are tremendous fiscal losses. That is not in just in Quebec, but in Canada as well?
Chief Executive Officer, La Maison Simons Inc.
Yes, because customs duties are not being collected, for one thing. Secondly, there are losses because sales tax is not being collected. That is a disadvantage.
For my part, all the products I sell are fully taxed and subject to customs duties. That is not true for other companies, however, so there is an imbalance or unfairness in terms of competition.
I am not asking for my business to be subsidized or protected, but simply for things be fair. As citizens, we have responsibilities, and that is expensive. For example, my company pays delivery charges and taxes that go towards maintaining our roads. Amazon, on the other hand, uses our roads to deliver products that are not subject to sales tax.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
I have one last question.
On the program, you mentioned that a very well-known Quebec company, DeSerres, had the opportunity to set up shop in the United States, specifically in order to benefit from being in that location. For your part, you dismissed out of hand the idea of setting up shop there.
Chief Executive Officer, La Maison Simons Inc.
I do not remember that comment specifically.
A de minimis threshold of $800 would certainly have a huge impact on the choice of location, a choice that would also be a function of the supply of labour and the minimum wage. That would impact a broad range of decisions.
Liberal
The Chair Liberal Mark Eyking
Thank you.
We're going to move on.
I remind MPs to be careful with the questions coming on the end of your five minutes. It throws a—
Liberal
Liberal
The Chair Liberal Mark Eyking
I know. It was a good question, but save it for the next round.
We're going to go to Ms. Ramsey.
Go ahead. You have five minutes.
NDP
Tracey Ramsey NDP Essex, ON
I apologize for being late.
Mr. Simons, I appreciate that you sent us your brief in advance so that I could look through it. I think I know the position of eBay and Mr. Geist quite well.
I want to talk about the levels of privacy protection around this e-commerce. I know, Mr. Geist, that you've been critical of the fact that there have been voluntary undertakings in our agreements so far. How can the government help SMEs and their customers around these particular rules of privacy? How important is it to Canadians and Canadian consumers?
You mentioned the TPP. Can you expand a little on maybe some of the things we could incorporate into trade agreements to have growth for SMEs but also protect our privacy?
Canada Research Chair in Internet and E-commerce Law, Faculty of Law, University of Ottawa, As an Individual
I think Canadian privacy law largely meets global standards, although we've started to see the European Union in particular, through something known as the GDPR, elevate those standards. I think we're going to rapidly face some challenges if the EU starts digging into whether or not we continue to meet those standards.
In terms of compliance domestically, we have a Privacy Commissioner, who of course enforces the anti-spam rules. It's a shared responsibility between the commissioner and the Competition Bureau and the CRTC. We have a number of players there on the domestic front.
How Canada can help develop better privacy protections on a global basis, particularly when Canadians may purchase or engage with foreign entities, to ensure there is adequate privacy protection, that's where there is, I suppose, the potential for trade agreements to play a role.
As I mentioned in my earlier response to Mr. Allison, it seems that one of the challenges we're facing is that the extent to which we're negotiating with the United States.... The U.S. has not been a particularly strong supporter of strong privacy protections. It tends to adopt more of an “anything goes” approach. As long as you disclose what it is that you're going to do and someone agrees to it, then so be it. I'd argue that's a bit of a fiction. Most people don't know the kinds of things they are clicking their way into.
Developing baseline standards of privacy protection is an important thing to do, certainly domestically. Also, as we enter into some of these trade agreements, whether NAFTA or TPP 11, or perhaps some others, we need to ensure that we establish an appropriate benchmark in those agreements.
NDP
Tracey Ramsey NDP Essex, ON
Thank you.
The other thing that has come up with this study has been about fair taxation and having a level playing field with U.S. companies, large multinationals like Netflix, Facebook, and Google, that aren't paying the same amount of tax, or paying essentially no tax to operate those platforms here in Canada. There are other countries, like New Zealand, Australia, Japan, and the EU, that have begun to bring laws and regulations into place that will allow them to collect some of those taxes.
I wonder if you can speak to how important it is to close that loophole. I'll open that to anyone.
I think our Canadian businesses and entrepreneurs need to have a level playing field in the digital space. I'll open it up to your thoughts on how important it is to close that loophole.
Canada Research Chair in Internet and E-commerce Law, Faculty of Law, University of Ottawa, As an Individual
Mr. Simons has obviously made a strong case for why he thinks there's a problem.
I'll say a couple of things. First off, I think there is an inevitability to sales taxes in the online environment, so with regard to this debate over Netflix sales tax, the notion that somehow there are a whole lot of people out there who are about to drop their Netflix subscriptions and go to something else strikes me as highly unlikely. It's a well-priced product, and if you added the sales tax I don't think it would move the meter very much.
That said, there are some countries that are starting to experiment. I think there are some dangers about implementing across-the-board sales taxes for anybody that happens to sell. The compliance costs, the enforcement costs for modest sales into Canada might well result in many of those businesses avoiding the Canadian market altogether, and that would decrease consumer choice and lessen competition.
The last point I would make—with all respect to my colleague on the panel here—is that no Canadian company succeeds in the e-commerce environment by solely targeting the Canadian market, so the notion that somehow if only we taxed everybody trying to sell into the Canadian market there would be opportunities for Canadian businesses to succeed online, with respect, I don't think that's consistent with what we've seen.
Over the last decade or so, we've seen consistently that Canadian companies can compete in the global market, but the only way you compete in the global market is by competing in the global market. Trying to increase costs in the Canadian market for some of that competition isn't really an effective way to do that.
Liberal
The Chair Liberal Mark Eyking
Thank you.
I'm sorry, Ms. Ramsey, your time is up. I know it was quick, but that's when you have great dialogue going on.
We're going to move on. You will have another three minutes later on. We're going to go over to the Liberals.
Mr. Dhaliwal, you have five minutes. Go ahead, sir.
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
Thank you, Mr. Chair.
Thank you to the presenters.
Ms. Stairs, in January there was an article published in The Globe and Mail. There were 50,000 eBay customers who signed a petition to the Minister of Finance to raise that threshold limit. On the other hand, the local consumers were not in favour of it.
How do you see that raising that threshold limit will negatively impact Canadian businesses, to continue with what Mr. Geist was saying?
Managing Director, eBay Canada Limited
How will it negatively impact Canadian business?
Managing Director, eBay Canada Limited
In fact, I don't think it will negatively impact Canadian business. I think the C.D. Howe report was pretty clear that an increase in the threshold would actually unlock 100 million dollars' worth of red tape costs from Canadian small business.
The reason eBay has been advocating on behalf of small and medium-sized businesses for an increase in the threshold is precisely, to Mr. Geist's point, to remove some of the frictions that are currently applied to Canadian small businesses as they try to transact in the global economy.
I think the playing field is not level precisely because you have Canadian small and medium-sized businesses trying to engage in global e-commerce using a de minimis threshold of $20 that is over 30 years old, set before e-commerce was a thing, competing against American sellers who are facing a de minimis threshold of $800. In fact, I think increasing the threshold to create freer trade for small and medium-sized businesses would be of net benefit to the country. Certainly, it would be of benefit to Canadian taxpayers.
We understand that even with the low enforcement threshold or low enforcement that currently exists, so that most low-value packages coming through the postal channel are waved through, even with that being the case, we know that the Canadian government is spending $170 million to collect $40 million in revenue. There must be a better way to spend those dollars.
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
In a constituency like mine, Surrey—Newton, 90% of the businesses are small businesses. How can eBay or other platforms help them to grow so they don't have to face the challenges they are facing right now?
Managing Director, eBay Canada Limited
That's precisely it. When we talk about our commercial sellers, these are tiny micro-businesses. These are businesses of one, two, three, or four people that may not have the expertise to launch a full-blown exporting business of their own, but by listing their inventory on a platform like eBay, they are able to close that gap. They are able to transact with customers in Australia, the U.K., the U.S., and anywhere else on the planet, and to do so at a very low cost. The cost of entry has effectively been done away with for exports.
I think precisely platforms like eBay are able to open up and democratize international trade in a way that hasn't been the case up until now, where trade has been the domain of large enterprises that are able to ship vast quantities of goods around the world. That's no longer the case.