Hotel Association of Canada Calls on Canadian Government to Tax Foreign Digital Platforms on Tax Freedom Day
Today marks Canada’s Tax Freedom Day, four days later than in 2018. While Canadians have an increased tax burden, foreign digital platforms – like Airbnb – operating in Canada still do not contribute to the Canadian economy.
According to the Fraser Institute, Tax Freedom Day measures the total yearly tax burden imposed on Canadians by all three levels of government. It references the number of days Canadians work to pay all of their taxes up front. While Canadians and Canadian businesses are working hard to pay their fair share of taxes, foreign digital platforms are able to unfairly benefit from an outdated tax loophole and are therefore not required to collect and remit sales tax or pay corporate taxes on their Canadian income.
According to the Auditor General’s 2019 Spring Report on the Taxation of E-Commerce, the Canadian sales tax system is not keeping pace with the rapidly evolving digital marketplace, with estimated losses of $169 million in sales tax revenues on foreign digital products and services annually. Earlier this month, Group of 20 finance ministers agreed to accelerate efforts to close loopholes used by global tech giants and collect taxes from these digital companies with a consensus-based solution by the end of 2020. Despite the positive rhetoric around global digital taxation, we urge Canada to take action now.
It’s time for the Government of Canada to modernize its tax laws and ensure everyone is treated fairly. We all have responsibilities to contribute to the Canadian economy, and foreign-owned digital businesses should not be given a tax holiday.
Alana Baker, Director of Government Relations at the Hotel Association of Canada