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How a complicated big-tech tax could cause a major headache for Canada-U.S. relations

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Cross-border economy experts are warning that Canada’s decision to strike out alone on a digital services tax could put it offside with its allies — and risk retaliation from the United States.

“There are a number of Canada’s allies that are anxious because Canada is breaking ranks when it’s usually a consensus follower” and has been engaged in the development of a multilateral approach to the issue, said Christopher Sands, director of the Canada Institute at the Woodrow Wilson International Center for Scholars in Washington, D.C.

The Liberal government first pledged in 2020 to bring in a digital services tax (DST) on big tech companies, but so far no levy is in place. The tax would apply to revenues of large tech companies that provide digital services, such as e-commerce, social media and online advertising.

The delay is due in part to the existence of a large-scale international process — led by the the Organization for Economic Co-operation and Development (OECD) and the G20 — that would implement a taxation system on major multinationals and would potentially replace digital services taxes that are currently in place around the world.

Along with the rest of the OECD, the government agreed to a two-year deferral period in 2021 to implement that tax, but Canada has now said it will not go along with an additional year’s delay.

 

The House9:05Why a new tax on big tech companies could spur the next Canada-U.S. spat

Featured VideoMove over, softwood lumber — there’s a new trade war on the horizon. CBC’s Emma Godmere looks at Canada’s move to press ahead with its long-planned Digital Services Tax on global tech giants and why it has U.S. lawmakers fuming. Tax law professor Allison Christians, former Canadian consul general James Villeneuve, cross-border trade watcher Laura Dawson and the Wilson Center’s Christopher Sands weigh in.

Deputy Prime Minister and Finance Minister Chrystia Freeland argues that delaying implementation of the international agreement by another year puts Canada at a disadvantage relative to countries that have been collecting revenue under their pre-existing digital services taxes.

In a revised estimate released last week, the Parliamentary Budget Office calculated that Canada’s proposed DST could increase federal government revenues by $7.2 billion over five years.

Deputy Prime Minister and Finance Minister Finance Chrystia Freeland, shown in Ottawa last month, says delaying implementation of an international agreement by another year puts Canada at a disadvantage relative to countries that already have digital services taxes. (Patrick Doyle/The Canadian Press)

James Villeneuve, a senior business adviser in the Toronto law office of Fasken who previously served as Canada’s consul general in Los Angeles, said there are a few reasons why Canada is committed to the tax.

“Revenue to the government is one big benefit,” he said. “The second benefit could be a communication policy that says we as a country are prepared to dig in against giant tech companies that aren’t based in the country.”

As part of a series of interviews with cross-border economics experts on CBC’s The House, which aired Saturday, Sands said Canada faces pressure on both the domestic and international fronts, making for a complex situation.

Canada’s closest trading partner has been hostile to the Canadian digital services tax. In a letter released in September, members of a U.S. House of Representatives committee denounced what they described as Canada’s “unusually aggressive and discriminatory approach.”

“It’s funny, everyone’s up in arms about U.S. divisions in Congress and how Congress can never agree on anything. Well, you know, one of the things they agree on is that this proposed tax in Canada is bad for American business,” said Laura Dawson, executive director of the U.S.-Canada group Future Borders Coalition.

Dawson, a Canadian based in Georgia, says Canada should think twice about its course of action on the potential tax, or risk widening a possible trade war with the U.S.

“When the U.S. Chamber of Commerce comes out and says, ‘Hey, don’t do this,’ maybe you raise an eyebrow. But when the Canadian Chamber of Commerce and the Business Council of Canada both say, ‘Hey, this is not good for Canada,’ it suggests to me that this offside independent approach is really not in the national interest,” she said.

Canada risks blowback from U.S., experts say

Sands and Dawson both said that Canada’s stance could make it into a target during next year’s U.S. presidential election.

“I suspect that Donald Trump or other Republicans will feel free to bash away at Canada,” Sands said, referring to the former U.S. president who’s running again.

Ottawa also risks escalating a conflict with big tech companies, who experts say could try to single Canada out.

“The idea had been that we would all move together because together it would be harder for the companies to sort of play us off of one another,” Sands said.

Senate approves bill to make streamers pay for Cancon

 

Featured VideoThe Senate has passed Bill C-11, which will force streaming platforms like Netflix and YouTube to contribute to funding Canadian content. Critics say the bill is too ambiguous, leaving many issues unresolved.

“The companies have an incentive to make an example out of Canada, trying to make this as painful for Canada as possible to try to drive them back into a consensus,” he said.

Dawson said Canada’s best move right now is to fall back in line with the international, multilateral approach, rather than striking out on its own.

“No one is arguing in favour of leaving big tech companies untaxed. I think there’s general agreement worldwide that there needs to be some form of fair taxation,” she said.

“But first of all, it needs to be multilateral because digital service is not one-way trade, not one country to another country. It’s multilateral, it’s moving everywhere.”

 

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Quebec party supports member who accused fellow politicians of denigrating minorities

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MONTREAL – A Quebec political party has voted to support one of its members facing backlash for saying that racialized people are regularly disparaged at the provincial legislature.

Québec solidaire members adopted an emergency resolution at the party’s convention late Sunday condemning the hate directed at Haroun Bouazzi, without endorsing his comments.

Bouazzi, who represents a Montreal riding, had told a community group that he hears comments every day at the legislature that portray North African, Muslim, Black or Indigenous people as the “other,” and that paint their cultures are dangerous or inferior.

Other political parties have said Bouazzi’s remarks labelled elected officials as racists, and the co-leaders of his own party had rebuked him for his “clumsy and exaggerated” comments.

Bouazzi, who has said he never intended to describe his colleagues as racist, thanked his party for their support and for their commitment to the fight against systemic racism.

Party co-spokesperson Gabriel Nadeau-Dubois said after Sunday’s closed-door debate that he considers the matter to be closed.

This report by The Canadian Press was first published Nov. 18, 2024.

The Canadian Press. All rights reserved.

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Virginia Democrats advance efforts to protect abortion, voting rights, marriage equality

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RICHMOND, Va. (AP) — Democrats who control both chambers of the Virginia legislature are hoping to make good on promises made on the campaign trail, including becoming the first Southern state to expand constitutional protections for abortion access.

The House Privileges and Elections Committee advanced three proposed constitutional amendments Wednesday, including a measure to protect reproductive rights. Its members also discussed measures to repeal a now-defunct state constitutional ban on same-sex marriage and ways to revise Virginia’s process to restore voting rights for people who served time for felony crimes.

“This meeting was an important next step considering the moment in history we find ourselves in,” Democratic Del. Cia Price, the committee chair, said during a news conference. “We have urgent threats to our freedoms that could impact constituents in all of the districts we serve.”

The at-times raucous meeting will pave the way for the House and Senate to take up the resolutions early next year after lawmakers tabled the measures last January. Democrats previously said the move was standard practice, given that amendments are typically introduced in odd-numbered years. But Republican Minority Leader Todd Gilbert said Wednesday the committee should not have delved into the amendments before next year’s legislative session. He said the resolutions, particularly the abortion amendment, need further vetting.

“No one who is still serving remembers it being done in this way ever,” Gilbert said after the meeting. “Certainly not for something this important. This is as big and weighty an issue as it gets.”

The Democrats’ legislative lineup comes after Republican Governor Glenn Youngkin, to the dismay of voting-rights advocates, rolled back a process to restore people’s civil rights after they completed sentences for felonies. Virginia is the only state that permanently bans anyone convicted of a felony from voting unless a governor restores their rights.

“This amendment creates a process that is bounded by transparent rules and criteria that will apply to everybody — it’s not left to the discretion of a single individual,” Del. Elizabeth Bennett-Parker, the patron of the voting rights resolution, which passed along party lines, said at the news conference.

Though Democrats have sparred with the governor over their legislative agenda, constitutional amendments put forth by lawmakers do not require his signature, allowing the Democrat-led House and Senate to bypass Youngkin’s blessing.

Instead, the General Assembly must pass proposed amendments twice in at least two years, with a legislative election sandwiched between each statehouse session. After that, the public can vote by referendum on the issues. The cumbersome process will likely hinge upon the success of all three amendments on Democrats’ ability to preserve their edge in the House and Senate, where they hold razor-thin majorities.

It’s not the first time lawmakers have attempted to champion the three amendments. Republicans in a House subcommittee killed a constitutional amendment to restore voting rights in 2022, a year after the measure passed in a Democrat-led House. The same subcommittee also struck down legislation supporting a constitutional amendment to repeal an amendment from 2006 banning marriage equality.

On Wednesday, a bipartisan group of lawmakers voted 16-5 in favor of legislation protecting same-sex marriage, with four Republicans supporting the resolution.

“To say the least, voters enacted this (amendment) in 2006, and we have had 100,000 voters a year become of voting age since then,” said Del. Mark Sickles, who sponsored the amendment as one of the first openly gay men serving in the General Assembly. “Many people have changed their opinions of this as the years have passed.”

A constitutional amendment protecting abortion previously passed the Senate in 2023 but died in a Republican-led House. On Wednesday, the amendment passed on party lines.

If successful, the resolution proposed by House Majority Leader Charniele Herring would be part of a growing trend of reproductive rights-related ballot questions given to voters. Since 2022, 18 questions have gone before voters across the U.S., and they have sided with abortion rights advocates 14 times.

The voters have approved constitutional amendments ensuring the right to abortion until fetal viability in nine states: Arizona, California, Colorado, Maryland, Michigan, Missouri, Montana, Ohio and Vermont. Voters also passed a right-to-abortion measure in Nevada in 2024, but it must be passed again in 2026 to be added to the state constitution.

As lawmakers debated the measure, roughly 18 members spoke. Mercedes Perkins, at 38 weeks pregnant, described the importance of women making decisions about their own bodies. Rhea Simon, another Virginia resident, anecdotally described how reproductive health care shaped her life.

Then all at once, more than 50 people lined up to speak against the abortion amendment.

“Let’s do the compassionate thing and care for mothers and all unborn children,” resident Sheila Furey said.

The audience gave a collective “Amen,” followed by a round of applause.

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Associated Press writer Geoff Mulvihill in Cherry Hill, New Jersey, contributed to this report.

___

Olivia Diaz is a corps member for The Associated Press/Report for America Statehouse News Initiative.

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Trump chooses anti-vaccine activist Robert F. Kennedy Jr. as health secretary

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NEW YORK (AP) — President-elect Donald Trump says he will nominate anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services, putting him in charge of a massive agency that oversees everything from drug, vaccine and food safety to medical research and the social safety net programs Medicare and Medicaid.

“For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to Public Health,” Trump said in a post on his Truth Social site announcing the appointment. Kennedy, he said, would “Make America Great and Healthy Again!”

Kennedy, a former Democrat who ran as an independent in this year’s presidential race, abandoned his bid after striking a deal to give Trump his endorsement with a promise to have a role in health policy in the administration.

He and Trump have since become good friends, with Kennedy frequently receiving loud applause at Trump’s rallies.

The expected appointment was first reported by Politico Thursday.

A longtime vaccine skeptic, Kennedy is an attorney who has built a loyal following over several decades of people who admire his lawsuits against major pesticide and pharmaceutical companies. He has pushed for tighter regulations around the ingredients in foods.

With the Trump campaign, he worked to shore up support among young mothers in particular, with his message of making food healthier in the U.S., promising to model regulations imposed in Europe. In a nod to Trump’s original campaign slogan, he named the effort “Make America Healthy Again.”

It remains unclear how that will square with Trump’s history of deregulation of big industries, including food. Trump pushed for fewer inspections of the meat industry, for example.

Kennedy’s stance on vaccines has also made him a controversial figure among Democrats and some Republicans, raising question about his ability to get confirmed, even in a GOP-controlled Senate. Kennedy has espoused misinformation around the safety of vaccines, including pushing a totally discredited theory that childhood vaccines cause autism.

He also has said he would recommend removing fluoride from drinking water. The addition of the material has been cited as leading to improved dental health.

HHS has more than 80,000 employees across the country. It houses the Food and Drug Administration, the Centers for Disease Control and Prevention, the Medicare and Medicaid programs and the National Institutes of Health.

Kennedy’s anti-vaccine nonprofit group, Children’s Health Defense, currently has a lawsuit pending against a number of news organizations, among them The Associated Press, accusing them of violating antitrust laws by taking action to identify misinformation, including about COVID-19 and COVID-19 vaccines. Kennedy took leave from the group when he announced his run for president but is listed as one of its attorneys in the lawsuit.

__ Seitz reported from Washington.

The Canadian Press. All rights reserved.

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