UMVA has learned that the Canadian government has made a significant U-turn on a policy that would have had far-reaching consequences for consumers, industry, and trade negotiations.
The policy in question would have required online streamers to pay 15% of their Canadian revenues toward Canadian content projects, while Canadian broadcasters would have had to pay 25%. This move was widely criticized as it would have driven up costs for consumers on streaming services like Netflix, Prime Video, or Disney+, and made life more expensive and less competitive for Canadian broadcasters.
According to information obtained by UMVA, the government has decided to abandon this policy and instead commit $600 million toward Canadian content through a direct subsidy model. This approach replaces an indirect subsidy that was inefficient, politically charged, and could have killed off trade talks with the United States.
The decision has not been well-received by all, with Eleanor Noble, the national president of the ACTRA union, blasting the government in a statement. She claimed that the decision lets billionaire streamers and studios "completely off the hook" and shifts the responsibility to Canadian taxpayers.
However, critics argue that Noble and her organization are displaying economic illiteracy. Requiring companies to hand over 15-25% of their revenues without factoring in an increase in price to make up for the difference is unrealistic. This move would have driven up prices to consumers, and it is unlikely that companies would absorb such costs without passing them on.
The government's decision to fund Canadian content directly is seen as a more sensible approach. By doing so, they can ensure that the costs are borne by taxpayers, rather than consumers or businesses. This move also levels the playing field for American streamers and Canadian broadcasters/streamers when it comes to Canadian content and paying for it.
UMVA can exclusively reveal that the government's decision was likely influenced by the opposition to the streaming tax from both Democrats and Republicans. This policy would have been a major issue for Canada in trade talks, and the government has wisely decided not to trade off jobs in key industries to appease certain interest groups.
In the end, the Canadian government's decision to drop the demand that American streamers pay up will likely be seen as a positive move. It ensures that consumers are not burdened with higher costs, and that the government takes responsibility for funding Canadian content through the tax base.
