JAY GOLDBERG: Tripling the streaming tax is a huge mistake

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If Carney government bureaucrats wanted to increase costs for consumers, drive businesses out of Canada, and anger the Trump administration all in one policy move, that’s exactly what they did on Thursday by making changes to the regulatory framework for the Online Streaming Act.

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The Online Streaming Act was passed by the Trudeau government in 2023. One of its most controversial provisions was to require online streaming giants like Netflix and Amazon Prime to hand over 5% of their Canadian revenue to the federal government, to be doled out to so-called “local media funds,” supposedly to support Canadian content and culture.

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At the time, everyone recognized this for what it was: a streaming tax. By essentially adding a new tax on online streaming giants, the federal government all but guaranteed streaming costs for Canadians would go up, as businesses don’t simply take new taxes or fees from the government lying down.

Hurting Canadian market

It also served to make the Canadian market less attractive: There’s a reason U.S. streaming giant Hulu, for example, isn’t in Canada at all. It’s not because they don’t want to make money here: rather, it’s because executives likely determined entering the Canadian market wasn’t worth all of the regulatory hurdles and costs associated with doing business in Canada.

Then there’s the trade angle.

Both the Biden and Trump administrations have loudly protested the Online Streaming Act and have threatened retaliatory trade measures as a consequence. The current United States Trade Representative (USTR), Jamieson Greer, has highlighted the Online Streaming Act as a key trade irritant and a sticking point in ongoing trade negotiations. And Republicans in Congress have crafted a bill that would call on the USTR to investigate the Online Streaming Act and possibly impose tariffs on Canada if the USTR were to find the legislation unfairly targets American corporations.

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The outcome of such an investigation is inevitable, as the major online streaming giants are based in the U.S. and the Online Streaming Act does unfairly target them.

With all of these negative factors, pressure was growing on the Carney government to repeal the Online Streaming Act. But instead, Ottawa has decided to triple down. On Thursday, the Canadian Radio-television and Telecommunication Commission (CRTC) announced plans to triple the tax imposed on streaming giants, increasing it from 5% of Canadian revenue to 15%.

If Ottawa bureaucrats wanted to poke the bear, they did.

What will this new 15% tax mean?

For one thing, it’ll mean higher streaming costs for Canadians. There’s no way companies like Netflix and Amazon will hand over 15% of their revenue to the Canadian government without increasing costs for consumers. For another thing, this could drive some streaming providers out of Canada altogether, with some concluding doing business in Canada simply isn’t worth the cost.

Thorny trade issue

And then there’s the trade issue.

The Online Streaming Act was already a thorn in the side of the Trump administration. By making it three times more costly for American businesses, there’s zero chance the Trump administration will fail to notice.

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Negotiations to renew the CUSMA, which has exempted Canada from the vast majority of the Trump administration’s tariffs and is literally the only reason why Canada has thus far avoided a recession, are set to begin within a matter of weeks. By making the Online Streaming Act an even bigger trade irritant for the Trump administration, the Carney government is poisoning negotiations before they even begin. Greer has long maintained advance negotiations on the CUSMA are progressing better with Mexico than with Canada. This surely won’t help matters.

It’s time for Prime Minister Mark Carney to act. He should come out and say the CRTC’s decision to triple the tax on U.S. streaming giants was wrong, both for consumer and for the future of trade negotiations with the U.S. And he should move swiftly to repeal the Online Streaming Act to save consumers money and help rescue trade negotiations with the U.S., which already appeared to be on life support.

In more ways than one, Canadians can’t afford an increased streaming tax.

Jay Goldberg is the North American Affairs Manager with the Consumer Choice Center

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