If the Canadian government wants to work better with the next U.S. administration, it should consider scrapping some difficult policies, such as the controversial digital services tax, says former Liberal finance minister Bill Morneau. say.
“I would like to step away from that and think about other places where we can move forward with mutual interest,” Morneau told CTV’s Question Period host Vassie Kapelos in an interview aired Sunday. “And we do it in a gentle way that recognizes that we need an enduring ability to work together.”
Morneau said that when dealing with President-elect Donald Trump and the looming threat of tariffs on Canadian imports, the federal government should look for issues on which the two countries can work together, rather than ones that “stoke differences.” Ta.
The Digital Services Tax, first proposed by the Liberals in the 2021 budget, would impose a 3% tax on the income of big tech companies that earn money from Canadian content and users.
The policy has been highly unpopular and widely criticized by U.S. lawmakers, who have long argued that it unfairly affects American businesses.
When faced with criticism of the policy, Finance Minister Chrystia Freeland pointed out that other Western allies impose similar taxes, but U.S. officials told Ottawa that the global framework I countered by asking them to wait until everything was ready.
Last October, Congressional budget officials estimated that the tax would generate $7.2 billion in revenue for the federal government over five years.
Although the plan was announced more than three years ago, the digital services tax was only recently introduced. In August, U.S. Trade Representative Katherine Tai announced that her government had requested dispute resolution talks through the North American Free Trade Agreement (CUSMA) on this issue.
In a press release at the time, Tai called the digital services tax “discriminatory” against U.S. companies.
“Canada’s position is really simple,” Freeland told reporters last month.
“The reality is that many of our allies, the UK, France and Italy, have now introduced digital services taxes,” Freeland said. “They use those taxes to raise revenue to make necessary investments in their own countries, investments in public transportation and things like that.”
“We know our country needs investment,” she added. “We know it costs money, and Canada will not tolerate not being on a level playing field with our partners and allies. That is our position.”
Meanwhile, Canada is trying to figure out how best to deal with President Trump’s threat to impose a 25% tariff on all imports from the country.
“I think we need to be very concerned, but we also need to recognize that the way to deal with it is to focus on our own interests,” said Morneau, who served as Canada’s finance minister during Trump’s first term. “There is,” he said.
“And our interest is to recognize a long-term positive relationship and make sure that is at the forefront of our minds and that we know is in the best interest of Canada and that relationship.” “It’s about doing things,” he said.
Ontario’s Minister of Trade agrees.
In an interview from Washington, D.C., on CTV News Channel’s Power Play this week, Ontario Trade Minister Vic Fideli told Kapellos that he would discuss the digital services tax with “important people,” namely Republicans, “in every meeting.” He said it was taken away.
“They all feel that Canada is unilaterally doing the wrong thing,” Fideli said. “By the way, our government thinks the same way, and has written to Prime Minister Trudeau in the past stating that the Digital Services Tax (DST) is not desirable.”
Asked if the federal government was receptive to Ontario’s concerns, Fideli said, “The government hasn’t changed its position yet.”
“But frankly, I really hope this is set up as one of the bargaining chips with the incoming Trump administration regarding potential tariffs. This is what they want.” “We are ready to give up our borders, we are ready to give up our 2 percent NATO (target),” he added. “In addition to DST, all of these are the topics of today, but we expect the Trudeau government to do some action behind its words.”
In the interview, Morneau also touched on the federal government’s self-imposed fiscal anchor, saying next week’s fall economic announcement is unlikely to meet his pledge to keep the budget deficit below $40.1 billion. He also mentioned Mr. Freeland’s suggestion.
The former finance minister emphasized the importance of the “quality of spending” that the federal government should set out in its autumn economic report, setting a new item with the goal of promoting “long-term positive economic outcomes”. said it should.
You can watch the full interview with former federal Finance Minister Bill Morneau during Question Period this Sunday at 11pm/8pm on CTV and CTV News Channel.
