Canada cannot afford to concede more to foreign tech giants

Joint letter in English and French

Dear Prime Minister Carney and Minister Champagne,

We are a group of patriotic Canadians and civil society organizations who care deeply about the future of Canada. We are disappointed by the government’s decision yesterday to both halt collection of the Digital Services Tax and eventually repeal the Digital Services Tax Act. As a result, on Canada Day, foreign tech giants will enjoy an immediate $2.5 billion windfall and a $7.2 billion tax break over the next 5 years. While we recognize the difficult choices facing the government, we feel that we cannot ‘build Canada strong’ while surrendering ever more of our digital sovereignty and security.

We urge the Government of Canada to:

1. Find ways to use foreign tech giants’ massive untaxed profits to fund homegrown alternatives, despite proposing that Parliament repeal the Digital Services Tax Act
2. Strengthen Canada’s digital sovereignty in trade negotiations and in undertaking a reset of Canada’s forward digital policy agenda, and
3. Make no further concessions to foreign tech giants, including on legislation passed by Parliament (the Online Streaming Act, Online News Act) or in addressing urgent matters including combatting online harms, regulating artificial intelligence, ensuring the integrity of the information environment (including for health information), protecting privacy, among other measures to rein in foreign tech giants’ negative impacts on our economy and society.

Foreign tech giants, especially U.S.-based companies, have made hundreds of billions of dollars in Canada in recent decades and yet have not paid their fair share in taxes. Many enjoy tax breaks on digital advertising paid for by Canadians thanks to a loophole in the Income Tax Act. We are one of the largest digital markets in the world, with a highly online population, skilled workers, and innovative companies. Yet in 2023 alone, U.S. tech giants made $20.7 billion in Canada from distributing online content. U.S. tech giants are crushing domestic competition, dominating our markets and imposing a range of externalities on

Canadians. They profit from the amplification of online harms, including the spread of false and manipulated information, hurting the mental and physical health of children along with all Canadians. They are eroding the economic basis for the professional news media and feeding the toxification of our increasingly digital public sphere upon which our democracy depends.

The Digital Services Tax is a modest yet much-needed measure that will ensure foreign tech giants are more fairly taxed and held accountable for their enormous power over Canada’s society and economy. We are disturbed to see the alignment of CEOs of Alphabet, Meta, Apple, Amazon and X Corp. with the current U.S. administration’s agenda, which threatens Canada’s political and economic independence.

Rather than repealing the DST, we urge you to consider how foreign tech giants’ massive unfair profits in Canada could be taxed to invest in Canada’s digital sovereignty, building homegrown alternatives to U.S. monopolies. At many times in our history, Canada has invested to build communications infrastructure in the national interest. Canadian companies can help build platforms, networks, and tools that reflect Canadian values, strengthen our cultural and information ecosystems, and nourish our diversity as a country with two official languages and three founding peoples – Indigenous, French and English – so that Canadians in communities across our far-flung country can better serve their own needs to communicate and connect.

We note that the U.K. did not make concessions to their digital services tax to get a trade deal with the US.

We stand ready to help our government, to inform and rally Canadians to help build our digital sovereignty and a better digital society.

Regards,

Organizational Signatories

1. ACTRA National
2. Amanda Todd Legacy Society
3. Broadbent Institute
4. Canadian Anti-Monopoly Project
5. Canadian Centre for Policy Alternatives
6. Canadian Centre for Child Protection
7. Canadian Federation of Nurses Unions
8. Canadian Medical Association
9. Canadian Media Guild
10. Canadians for Tax Fairness
11. Centre for Media, Technology and Democracy
12. Children’s Healthcare Canada
13. Community Radio Fund of Canada
14. The Dais
15. Documentary Organization of Canada
16. Friends of Canadian Media
17. Goodbot Society
18. Inspiring Healthy Futures
19. OpenMedia
20. Pediatric Chairs of Canada
21. Reset Tech
22. Unifor
23. National & Local 87-M

Individual Signatories:

1. Mike Ananny, former advisor to Canadian Heritage on the future of CBC/Radio-Canada, and Associate Professor of Communication and Journalism, University of Southern California
2. The Right Honourable Adrienne Clarkson, CC
3. Linda McQuaig, author and journalist
4. Taylor Owen, Director of the Centre for Media, Technology and Democracy and Associate Professor at McGill University
5. John Ralston Saul, CC Leslie Regan Shade, Professor Emerita, Faculty of Information, University of Toronto Paul Vallée, CEO of Tehama.io
6. Dwayne Winseck, Director Global Media and Internet Concentration Project, and Professor School of Journalism and Communication, Carleton University