Canada is primed to implement a set of policies already popular in other countries, including a digital services tax and telecoms contract notifications
The Government introduces its plan for a consumer-focused budget
On 2 May 2024, the Budget Implementation Act of 2024 received its first reading in the Canadian Parliament. In addition, the Canadian Government also introduced a follow-up implementation bill for selected measures from the 2023 budget. Together, the bills comprise the Government’s effort to enact a spending plan that centres on consumers and provides “fairness for every generation”, including a number of measures related to the tech and telecoms sectors. While the fiscal year begins on 1 April in Canada, the budget process typically concludes between Q2 and Q3 of the year, with agencies authorised to spend a certain portion of their likely appropriation in the interim period to continue their operations. Historically, the Canadian budget process is highly partisan, meaning the Government’s proposals are likely to pass with the support of the majority party.
Canada moves ahead with its implementation of a digital services tax after a three-year delay
Under the provisions of the 2023 budget implementation bill, the Canadian Government is moving ahead with fully implementing its plans for a digital services tax. Despite introducing the measure in 2020, the Government agreed to pause the implementation of the tax for two years until 2023, pending the progress of the Pillar One and Two global tax negotiations brokered by the OECD. The measure would apply a 3% tax on tech firms with global revenue of over €750m (£645m) and Canadian revenue over C$20m (£11m). Specifically, the measure would apply to firms that operate online marketplaces, online targeted advertising, social media platforms and the sale or licensing of online user data, and would cover revenue dating from 1 January 2022 onward. The Canadian Government states that it estimates the tax would bring in C$5.9bn (£3.4bn) over five years from 2024. In announcing its decision, the Government also notes that a number of other countries have continued applying similar taxes throughout Pillar One negotiations, including France, India, Italy, Spain and the UK. Critics of the Canadian digital tax proposal, as well as similar policies around the world, note that these measures almost exclusively impact American tech firms and excuse smaller competitors from other countries, including those countries enacting a tax.
The budget also includes amendments to the Telecommunications Act related to switching and contract notices
Alongside the fiscal measures for 2024, the Canadian Government also plans to introduce new consumer protection measures in the telecoms sector. In a set of amendments to the Telecommunications Act, the Government proposes requiring operators to provide a contract expiration notice and banning switching fees. The changes would also require that operators create a “self-service” mechanism to allow consumers to cancel, renew or modify their contracts on their own. The Canadian Radio-television and Telecommunications Commission (CRTC) would be empowered to enforce the provisions in both fixed and mobile markets. If approved, these amendments would coordinate with additional consumer protections measures currently under consideration by Parliament, including stricter rules around broadband speed advertising. The changes, which the Government has broadly described as an effort to “lower everyday costs” for consumers, would also align with similar provisions on switching and contract notifications in other markets, such as the EU and the UK.
