Good morning, Madam Chair.
Thank you for having invited us once again to appear before the Standing Committee on Public Accounts.
I'd like to give the committee a brief overview of recent changes that are relevant to your examination of the Auditor General's report on the taxation of e-commerce.
In the fall economic statement tabled earlier this week, the government proposed a number of changes designed to level the playing field for Canadian businesses in terms of applying the goods and services tax, the GST, to all products and services consumed in Canada, regardless of how they are supplied or who supplies them.
There are three proposals related to the GST and the harmonized sales tax, the HST.
Let me just briefly review the three changes that were introduced in the fall update, as they relate to the taxation of electronic commerce.
The first relates to foreign-based vendors with no physical presence in Canada, as these currently do not have to charge the GST on sales of digital products or services. These digital products and services that we're talking about include things like mobile apps, online video gaming, and video and music streaming.
To enhance tax fairness between Canadian and foreign-based vendors, the government proposes that foreign-based vendors selling digital products or services to consumers in Canada be required to register for, collect and remit the GST or the HST on their sales to Canadian consumers. It's estimated that this measure will raise $243 million in revenue during the first full fiscal year that it is in effect, which will be 2022-23.
I would only note that the proposed approach is modelled on the guidelines developed by the OECD.
The second measure relates to a situation of there currently being no requirement for foreign-based vendors, including those that sell through digital platforms, to collect the GST or the HST on sales of goods stored in Canadian fulfillment warehouses. These are warehouses that foreign-based vendors use to store goods and then make deliveries to Canadians in a timely way.
In the fall statement, the government proposes to apply the GST and the HST on all sales to Canadians of goods that are located in Canadian fulfillment warehouses. Under this proposal, the GST and the HST will be required to be collected and remitted by either the foreign-based vendor or the digital platform that facilitates that sale. We estimate that this measure will raise $275 million in revenue in the first full year that it is in effect, which is, again, 2022-23.
The third measure relates to property owners who are renting out their residences or other residential property through digital platforms for short-term periods. To improve GST and HST compliance and to ensure fairness across the accommodation sector, the government proposes to apply the GST and the HST to all platform-based short-term rental accommodation supplied in Canada. We estimate that this measure will raise about $65 million in 2022-23.
These changes are proposed to take effect as of July 1, 2021.
That concludes my overview of the government's recent proposals.
My colleague Andrew Marsland and I would be happy to answer any questions you might have.
Thank you.