Feds boost Universal Broadband Fund by another $1B, propose Digital Services Tax

As part of its 2021 budget, the federal government is plowing another $1 billion dollars into its Universal Broadband Fund over the next five years, bringing the total fund up to $2.75 billion. According to the budget document released Monday, the government will spread the additional $1 billion over five years starting in 2021-2022, with more than half of it—some $616 million—front-loaded in the first two years. The fund was first announced in the 2019 budget as a $1 billion program, but didn't actually open for applications until the fall of 2020, when it was topped up by another $750 million. According to budget documents, the money was aimed at connecting 98 per cent of Canadians by 2026, and 100 per cent by 2030, goals previously outlined this past fall. The initial launch of the program was delayed several times, declared as being accelerated in April 2020, and then tipped in June 2020 to launch in the “coming days.” The budget also proposes the implementation of a "Digital Services Tax" to come into force Jan. 1, 2022, which would "ensure that revenue earned by large businesses—foreign or domestic—from engagement with online users in Canada, including through the collection, processing and monetizing of data and content contributions from those users, is subject to Canadian tax," the budget document reads. The government estimates that it will pull in some $3.4 billion in revenue over five years from the tax. It would apply to businesses that meet thresholds of both €750 million or more in global revenue in the previous calendar year, and revenue of $20 million from Canadian users. The tax would levy a three per cent rate on revenue from digital services "reliant on the engagement, data and content contributions of Canadian users." The tax would, according to the document, apply to online marketplaces, social media platforms (though not " an interface of which the sole purpose is to provide communications services"), and online advertising. The document defines "online advertising" as "online marketplaces, social media platforms, internet search engines, digital content streaming services, and online communications services," and would tax "revenue earned by an interface operator from the display of advertising on the interface as well as revenue earned from systems for facilitating online advertising placement by third parties." The government said it plans to engage with provinces and territories and is seeking feedback from stakeholders by June 18, after which it would release the new statute for public consultation over the summer. “Work is underway to reach a multilateral agreement on cross-border digital taxation by mid-2021, and Canada is optimistic about the progress made this year," the budget document reads. "However, multilateral discussions have been going on since 2013. That is why, while Canada’s hope and preference is for a multilateral solution this summer, whether or not a deal is reached, Canada intends to take action." The budget also earmarks some $17.6 million over five years for the creation of a new Data Commissioner, which would "inform government and business approaches to data-driven issues to help protect people’s personal data and to encourage innovation in the digital marketplace," according to budget documents. The creation of a Data Commissioner was first called for in mandate letters to Heritage Minister Steven Guilbeault and former Innovation Minister Navdeep Bains following the 2019 federal election. The Data Commissioner will have an ongoing budget of $3.4 million per year, alongside spending of $8.4 million over five years and $2.3 million ongoing to the Standards Council of Canada to "continue its work to advance industry-wide data governance standards," according to the budget document. In May of 2020, the federal Office of the Privacy Commissioner indicated in a briefing note that the federal privacy watchdog was curious about how a new Data Commissioner would interact with the OPC. The budget also sets aside a one-year $21 million cash injection in "immediate operational support" for CBC/Radio-Canada. “This funding will ensure its stability during the pandemic and enable it to continue providing news and entertainment programming that keeps Canadians informed," the government wrote in budget documents. After putting $50 million toward the Canadian film industry in insurance backstops this past fall, the government is also putting $105 million over three years to Telefilm Canada "to modernize its current suite of programs to provide better access to a diverse range of creators and producers, support green practices, and respond to increasing digitization in the audiovisual industry." — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Hannah Daley at hdaley@thewirereport.ca

Feds boost Universal Broadband Fund by another $1B, propose Digital Services Tax

News | April 19, 2021

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