New “Netflix tax” for Manitobans in latest provincial budget

New “Netflix tax” for Manitobans in latest provincial budget

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Manitobans will soon be paying more for Netflix and Spotify subscriptions, among others.
Beginning in December, streaming services, online hosting and online marketplaces will have to charge provincial sales tax, the province said as part of its 2021-2022 budget, which was unveiled on Wednesday.

The new tax measure – often referred to as the “Netflix tax” – is expected to bring in an additional $ 8.8 million this fiscal year and $ 26.5 million in its first full year of implementation.

This will mean a stay in an Airbnb rental in Manitoba, a monthly subscription to a streaming service, or the purchase of products from third-party sellers on sites such as Amazon or Best Buy will be subject to Manitoba 7% PST.

This means that a Netflix subscriber with a standard monthly plan of $ 14.99 will pay an additional 90 cents per month, or about $ 11 per year, for the service.

A fairer tax: first

Premier Brian Pallister said the ruling makes the tax structure fairer, so all businesses – whether local or international – are on an equal footing.

“The current structure was a free ride for some and an additional unfair advantage for others,” Pallister said after the budget was released on Wednesday.

“It has been stated that I don’t like high taxes – and I think that’s probably true in general – but what I [also] don’t like unfair taxes. ”

Prime Minister Brian Pallister said the new tax creates a level playing field for all businesses. (David Lipnowski / The Canadian Press)

Earlier today, Finance Minister Scott Fielding also said the new taxes were fair, specifically mentioning local hotels, which have been hit hard by the pandemic.

It’s unfair that they have to compete with Airbnb rentals that currently don’t charge sales tax, Fielding said.

“If you manage to level the playing field, it will benefit some local players. “

Manitobans used to pay sales tax when they brought products directly from online retailers, but third-party sellers on those sites had not had to collect PST until now.

WATCH | Prime Minister Brian Pallister explains why his government is going to introduce a “Netflix tax”:

Manitoba Premier Brian Pallister acknowledged on Wednesday that his government’s decision to add PST to online services such as Netflix in the 2021-2022 budget would make those services more expensive for some Manitobans, but said it would would make the overall tax system fairer. 0:57

It will also mean that PST will be added to products purchased from online marketplaces like Etsy, if the person sells more than $ 10,000 worth of merchandise per year and is registered.

Private sales organized through sites like Kijiji or Facebook Marketplace will not be subject to tax.

Some people who will end up paying more say they agree with the new tax. CBC spoke to several Manitobans at The Forks on Wednesday, who all said they were willing to pay a bit more for streaming services.

“I don’t think that’s really a big deal,” said Tyler Duncan, of the Norway House Cree Nation.

“If we’re contributing to the economy that’s a good thing, and if we weren’t paying taxes on Netflix before, then we probably should. “

Tyler Duncan says he’s okay with paying a bit more for Netflix to help stimulate the provincial economy. (Austin Grabish / CBC)

PST is already collected on streaming services like Crave as they already have a physical presence in Canada. Amazon Prime users were already paying PST because the company voluntarily collected it and paid it to the province.

Under current rules in Manitoba, overseas-based digital businesses that do not have a physical presence in the province can sell goods and services without charging provincial sales tax or federal sales tax.

British Columbia, Saskatchewan and Quebec already require foreign digital service providers to register and collect provincial sales tax on services.

The federal government reported his fall economic declaration it planned to require multinationals to collect GST or Harmonized Sales Tax (HST) on digital products and services from July 2021.

The move is expected to bring an additional $ 1.2 billion in revenue to Ottawa over the next five years.

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