Canada won't pause digital services tax despite pressure from U.S., finance minister says
OTTAWA — Canada won't put a hold on the digital services tax on big tech companies set to take effect on June 30, the finance minister said Thursday.
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Finance Minister Francois-Philippe Champagne said Thursday the legislation was passed by Parliament and Canada is 'going ahead' with the tax.
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'The (digital services tax) is in force and it's going to be applied,' he told reporters before a cabinet meeting on Parliament Hill.
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It will apply retroactively, leaving U.S. companies with a $2 billion US bill due at the end of the month. A June 11 letter signed by 21 members of Congress said U.S. companies will pay 90 per cent of the revenue Canada will collect from the tax.
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Canadian and U.S. business groups, organizations representing U.S. tech giants and American members of Congress have all signed letters in recent weeks calling for the tax to be eliminated or paused.
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It's set to take effect just weeks before a deadline Canada and the U.S. have set for coming up with a new trade deal, following months of trade conflict between the two countries.
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Rick Tachuk, president of the American Chamber of Commerce in Canada, said the plan to go ahead with the tax 'undercuts those talks and risks derailing the agreement.'
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'A retroactive tax like the DST, weeks before a new deal is supposed to be done, isn't a bargaining chip. It would likely be viewed as a provocation,' he said in an emailed statement.
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The Canadian Chamber of Commerce and other organizations have warned retaliatory measures in a U.S. spending and tax bill could hit Canadians' pension funds and investments.
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Champagne said Canada isn't the only country that could be affected by those retaliatory measures.
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David Pierce, the Canadian Chamber of Commerce's vice-president of government relations, said in an earlier interview his organization fears Canada could 'aggravate an already very tricky trade discussion with the Americans' if it goes ahead with the tax and the retroactive payment requirement.
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Matthew Holmes, the chamber's executive vice-president and chief of public policy, said in a statement that a Liberal government announcement on counter-tariffs to protect the steel and aluminum industries Thursday was 'geared toward the 30-day deadline, so we see no reason why DST's timeline shouldn't be as well.'
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