0.000000 2.920000 Tech It From Me is an independent and solo-produced podcast. 2.920000 6.220000 Welcome to the Tech It From Me podcast, I'm Mike Madole. 6.220000 9.840000 Imagine paying a tax for advertising your business online, 9.840000 11.920000 but only because the tech platform you use 11.920000 14.280000 happens to be based in another country. 14.280000 16.260000 Canada was ready to do exactly that 16.260000 19.640000 with the digital sales tax until earlier this week 19.640000 21.560000 when it's suddenly back down. 21.560000 23.200000 So what happened? 23.200000 25.560000 And is taxing tech giants really the best way 25.560000 27.600000 to build our digital economy? 27.600000 29.360000 This is Tech It From Me. 29.360000 30.960000 Let's dive in. 30.960000 32.900000 This is the Tech It From Me podcast. 32.900000 35.400000 So the digital services tax or DST 35.400000 38.800000 is basically a special tax applied to the revenue 38.800000 42.120000 big tech companies earn by providing digital services 42.120000 46.360000 within a country even if they don't have a physical office there. 46.360000 50.320000 So in Canada's case, it was designed as a 3% tax on revenue 50.320000 53.480000 earned by large multinational companies. 53.480000 58.040000 Think of names like Google, Facebook, Amazon, Apple. 58.040000 61.600000 Specifically on money they make from online advertising, 61.600000 65.000000 running social media platforms, collecting and monetizing 65.000000 68.400000 user data, and operating online marketplaces 68.400000 71.080000 like Amazon.ca. 71.080000 74.680000 The idea behind a DST was pretty straightforward. 74.680000 76.880000 These tech giants make billions of dollars 76.880000 79.360000 from Canadian users and businesses. 79.360000 81.680000 But because they're headquartered elsewhere, 81.680000 84.640000 they end up paying very little tax in Canada. 84.640000 86.280000 So the government wanted to ensure 86.280000 89.200000 they contributed their fair share to the Canadian economy, 89.200000 91.640000 just like local businesses do. 91.640000 98.040000 The DST was included in Bill C59, which passed in 2024. 98.040000 103.440000 And it was retroactive all the way back to January 1st, 2022. 103.440000 106.040000 But it wasn't aimed at every online business. 106.040000 110.240000 Only those with at least 750 million euros in global revenue 110.240000 113.880000 and over 20 million in Canadian revenue each year. 113.880000 116.400000 These numbers were selected because they aligned 116.400000 119.040000 with the organization for economic cooperation 119.040000 123.120000 and development, or the OECD's discussions targeting 123.120000 125.760000 the biggest players in a digital space. 125.760000 129.480000 Not small or medium-sized Canadian tech companies. 129.480000 131.760000 So why introduce a DST? 131.760000 134.480000 Supporters of the digital services tax argued 134.480000 137.920000 it was really about fairness and economic balance. 137.920000 139.080000 Think about it. 139.080000 142.880000 Local Canadian businesses pay taxes on the profits they earn here. 142.880000 146.040000 A small marketing agency in Calgary and e-commerce 146.040000 150.480000 start up in Toronto or a retail business advertising online. 150.480000 153.240000 They all pay their share to the Canadian government. 153.240000 156.680000 But global tech giants, like Google and Facebook, 156.680000 158.960000 often use complex international structures 158.960000 162.200000 to shift their revenue to low tax countries, 162.200000 165.120000 places where corporate tax rates are minimal. 165.120000 167.600000 That way, they can report less income in Canada 167.600000 170.240000 and avoid paying much tax here. 170.240000 173.760000 Even though they earn huge amounts of money from Canadian users 173.760000 176.480000 and businesses every single day. 176.480000 178.880000 The parliamentary budget office estimated 178.880000 184.360000 that implementing the DST would raise around $7.2 billion 184.360000 186.120000 over five years. 186.120000 188.600000 That's not a minuscule amount for sure. 188.600000 191.800000 It could fund important federal programs, public services, 191.800000 196.560000 or investments in digital infrastructure across the country. 196.560000 199.440000 And Canada wasn't alone in thinking this way. 199.440000 202.400000 France, the United Kingdom, and several other countries 202.400000 205.000000 have already introduced similar digital taxes 205.000000 206.960000 to level the playing field. 206.960000 209.520000 Making sure these multinational tech companies contribute 209.520000 213.800000 fairly to the economies where they operate and earn revenue. 213.800000 217.520000 But the DST wasn't without a share of controversy and criticism. 217.520000 219.920000 Business groups like the Canadian Chamber of Commerce 219.920000 222.240000 and the Center for Canadian Innovation 222.240000 226.040000 raised some serious concerns about how the DST would actually 226.040000 228.200000 play out in the real world. 228.200000 231.000000 They warned that it would, one, raise costs 231.000000 233.720000 for Canadian consumers and businesses. 233.720000 234.640000 Why you might ask? 234.640000 237.560000 Well, because tech companies like Google and Amazon 237.560000 240.080000 wouldn't just absorb a 3% tax. 240.080000 242.320000 Instead, they would pass those extra costs down the line 242.320000 246.960000 to advertisers, marketplace sellers, app developers, 246.960000 251.560000 and ultimately to regular Canadians using their services. 251.560000 254.520000 Secondly, they argued it would hurt Canadian startups, 254.520000 257.000000 especially those that rely heavily 257.000000 262.080000 on affordable digital advertising to reach customers and grow. 262.080000 264.560000 A sudden increase in ad costs can make it harder 264.560000 267.560000 for small businesses to compete against bigger companies 267.560000 269.600000 with deeper pockets. 269.600000 272.960000 Thirdly, risk retaliation from the United States, 272.960000 276.640000 which is by far a Canada's largest trading partner. 276.640000 279.960000 And that's a huge deal, because any tension with the US 279.960000 284.000000 can spill over into other sectors like agriculture, 284.000000 287.240000 manufacturing, or automotive. 287.240000 290.400000 And as it turns out, those concerns were not just 290.400000 292.040000 theoretical. 292.040000 295.000000 The US government called the DST discriminatory 295.000000 298.640000 against American companies, arguing that it unfairly targeted 298.640000 303.000000 them simply because they were successful global players. 303.000000 306.320000 President Trump went even further threatening retaliatory 306.320000 308.840000 tariffs against Canadian industries, 308.840000 312.320000 unless Canada backed down on implementing the tax. 312.320000 315.200000 For a country so heavily reliant on US trade, 315.200000 317.920000 that threat carried a lot of weight. 317.920000 321.160000 Now, fast forward to June 30th, 2025. 321.160000 324.400000 And after months of tension and with trade negotiations 324.400000 328.120000 completely stalled, and the threat of new US tariffs 328.120000 332.240000 looming under horizon, Canada decided to take a step back. 332.240000 333.720000 The government announced it would officially 333.720000 336.720000 pause the implementation of the DST and pledge 336.720000 339.560000 to completely rescind the tax in the coming months 339.560000 342.360000 to get trade talks back on track. 342.360000 345.800000 This decision was welcomed by US tech giants, 345.800000 348.560000 such as Google, Meta, Amazon, who 348.560000 351.960000 were relieved to avoid the added tax burden. 351.960000 355.440000 It was also welcomed by Canadian industries, especially 355.440000 357.440000 those in manufacturing and agriculture 357.440000 361.040000 who feared that retaliatory tariffs could hurt exports 361.040000 362.920000 and damage their businesses at a time 362.920000 366.400000 when the economy is already under pressure. 366.400000 369.640000 But at the same time, the move drew criticism. 369.640000 371.440000 Some argued that by backing down, 371.440000 373.360000 Canada was abandoning its commitments 373.360000 376.440000 to making big tech companies pay their fair share 376.440000 379.760000 and simply caving into US pressure. 379.760000 382.900000 For critics, it felt like Canada was prioritizing trade 382.900000 385.400000 peace over tax fairness. 385.400000 387.800000 Raising the question, what's the right balance 387.800000 390.400000 between protecting our economy and ensuring 390.400000 393.200000 global companies contribute fairly here? 393.200000 396.920000 At the same time, the UK is standing firm with its DST. 396.920000 399.000000 It continues to tax digital revenue 399.000000 403.160000 while supporting a broader OECD global tax agreement, 403.160000 405.120000 which aims to create a unified approach. 405.120000 407.680000 So countries aren't going it alone. 407.680000 411.240000 At global deal would include a minimum corporate tax rate 411.240000 415.040000 and rules to tax profits where customers are located, 415.040000 418.040000 not just where companies are headquartered. 418.040000 420.440000 So to clarify this a little bit further, 420.440000 423.680000 when countries like France introduce DST, 423.680000 426.320000 companies such as Google simply added a tax 426.320000 429.880000 as a surcharge on their advertising bills. 429.880000 433.000000 So this meant that Canadian businesses running ads 433.000000 436.240000 would end up paying 3% more, which for startups 436.240000 440.760000 and small businesses is a significant additional cost. 440.760000 442.800000 So what does this all mean? 442.800000 446.080000 Well, here's my personal take on all of this. 446.080000 449.400000 On paper, the DST makes perfect sense. 449.400000 451.480000 It ensures that global tech giants contribute 451.480000 455.600000 to Canada's tax base, just like our local businesses do. 455.600000 457.280000 After all, they earn billions here. 457.280000 459.640000 It's only fair that they give back. 459.640000 463.960000 But in reality, it's not the tech giants who pay the price. 463.960000 467.520000 The extra 3% cost isn't absorbed by them. 467.520000 470.800000 Instead, it gets passed down to chain to advertisers 470.800000 474.960000 who run Google ads, to marketplace sellers on Amazon, 474.960000 478.640000 to app developers paying platform fees, 478.640000 481.880000 and ultimately, it lands on Canadian consumers 481.880000 485.880000 who end up paying higher prices for digital services. 485.880000 488.240000 And frankly, that worries me because it means 488.240000 491.320000 Canadian startups and small businesses, 491.320000 493.200000 the ones we're trying to help grow end up 493.200000 496.040000 facing higher costs and tighter margins 496.040000 499.280000 in an already competitive digital economy. 499.280000 502.320000 I think there's a better way to achieve fairness. 502.320000 506.120000 Let's take a look at how the CRTC works in broadcasting. 506.120000 509.120000 Companies that profit from distributing content in Canada 509.120000 513.040000 are required to fund Canadian content production. 513.040000 515.000000 That policy keeps our culture strong 515.000000 517.680000 and supports our creative industries. 517.680000 521.040000 So what if we apply to similar model to Big Tech? 521.040000 523.280000 Instead of imposing a flat tax that ends up 523.280000 525.720000 burdening Canadian businesses, what 525.720000 528.560000 if we required international digital platforms 528.560000 531.600000 to invest a small percentage of their Canadian revenue 531.600000 534.800000 directly back into our digital ecosystem? 534.800000 537.960000 I could mean funding Canadian tech startups, 537.960000 541.360000 supporting digital skills training programs, 541.360000 544.480000 investing in rural broadband infrastructure, 544.480000 549.480000 or even creating grants for innovative Canadian app developers. 549.480000 552.400000 Instead of burdening our economy with indirect costs 552.400000 557.520000 and more taxes, we'd be empowering it with direct investment, 557.520000 560.360000 building a stronger, more competitive, 560.360000 563.920000 and more innovative digital future for Canada. 563.920000 568.080000 There are two very vocal and opposite opinions to this topic. 568.080000 570.040000 The bottom line for me is this, 570.040000 574.440000 if our goal is truly to strengthen Canada's digital future, 574.440000 577.600000 then simply taxing it isn't the solution. 577.600000 579.680000 Empowering it is. 579.680000 582.320000 Yes, global tech giants should contribute fairly 582.320000 584.440000 to the economies they profit from. 584.440000 588.320000 That's a matter of basic fairness and economic justice. 588.320000 590.640000 But at the same time, we need to think carefully 590.640000 593.240000 about how we achieve that goal. 593.240000 595.960000 Because if our approach ends up hurting Canadian businesses 595.960000 599.400000 and startups, raising costs for the very people and companies 599.400000 602.040000 trying to build our economy from within, 602.040000 604.480000 then we're truly missing the mark here. 604.480000 607.480000 We need policies that build up our digital ecosystem, 607.480000 610.680000 not ones that chip away at its foundations. 610.680000 614.520000 Policies that support innovation, encourage investment, 614.520000 617.280000 and give Canadian entrepreneurs every opportunity 617.280000 619.920000 to succeed instead of adding hidden costs 619.920000 622.280000 and new barriers to their growth. 622.280000 625.120000 But hey, that's just my perspective. 625.120000 627.640000 So what do you think? 627.640000 630.400000 Should Canada have gone ahead with the digital services tax 630.400000 632.520000 to make big tech pay more? 632.520000 635.600000 Was backing down the right move to protect trade relations 635.600000 637.680000 and businesses here at home? 637.680000 640.240000 Or is there a smarter, more balanced way 640.240000 643.120000 to ensure these global companies contribute fairly 643.120000 646.960000 without hurting Canadian consumers and startups in the process? 646.960000 649.120000 I'd love to get your thoughts on this. 649.120000 652.880000 Email me at Inspire@TechitFromMe.com 652.880000 656.200000 or leave a comment wherever you're listening to this episode. 656.200000 658.640000 Your perspectives, your insights, and your experiences 658.640000 663.160000 help shape these conversations and really just keep them real. 663.160000 666.520000 After all, this podcast isn't just about tech news. 666.520000 668.760000 It's about what technology means for all of us, 668.760000 673.600000 right here in Canada, in our businesses and in our lives. 673.600000 675.840000 Thanks for tuning in to Tech It From Me. 675.840000 678.000000 If you enjoyed this episode, share it with a friend 678.000000 680.320000 and don't forget to subscribe for more insights 680.320000 683.400000 on how technology shapes our lives, our businesses, 683.400000 685.040000 and our future. 685.040000 690.240000 Until next time, I'm Mike Madole, and that's your tech taken from me. 690.240000 692.704438 Tech It From Me is an independent and solo-produced podcast.