The new “Netflix tax” for Manitobans comes as part of the latest regional budget

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Manitobans will soon pay more for Netflix and Spotify subscriptions, among others.

Starting in December, streaming services, online accommodations and online marketplaces will be required to collect regional sales tax, the province announced as part of its 2021-22 budget, which was unveiled on Wednesday.

The new tax measure – often called the “Netflix tax” – is expected to bring in an additional $ 8.8 million this fiscal year and $ 26.5 million during its first full year of implementation.

That would mean staying on an Airbnb rental site in Manitoba, a monthly subscription to streaming service or purchasing products from third-party sellers on sites like Amazon or Best Buy that would be subject to Manitoba’s PST at 7 percent.

This means that a Netflix subscriber who has a standard $ 14.99 monthly plan will pay an additional 90 cents a month, or roughly $ 11 a year, for the service.

Fairer tax: Premiere

Prime Minister Brian Ballester said the move makes the tax structure more fair, so all businesses – whether domestic or international – operate on an equal footing.

“The current structure has been a free flight for some and an additional unfair advantage for others,” Ballister said after the budget was released on Wednesday.

“It’s been said that I don’t like high taxes – and I think maybe this is generally true – but what I am [also] I do not like unfair taxes. ”

Prime Minister Brian Ballister said the new tax is creating a more level playing field for all businesses. (David Lipnowski / The Canadian Press)

Earlier in the day, Finance Minister Scott Fielding also said the new taxes are fair, specifically referring to local hotels, which have been hit hard by the pandemic.

Fielding said it’s unfair for them to compete with Airbnb rental companies that currently don’t charge sales tax.

“If I was able to level the playing field, it would be good for some local players.”

Manitobans previously paid sales tax when they brought products directly from online retailers, but outside sellers on these sites haven’t had to charge a PST yet.

It would also mean adding a PST to products purchased through online marketplaces like Etsy, if the person sells more than $ 10,000 worth of merchandise annually and is registered.

Private sales arranged via sites like Kijiji or Facebook Marketplace will not be subject to tax.

Some people who will end up paying more said they are okay with the new tax. CBC spoke to several Manitobans at The Forks on Wednesday, and all of them said they were open to paying more for the streaming services.

“I don’t think it’s really a big deal,” said Tyler Duncan, from House Cree Nation, Norway.

“If we’re contributing to the economy, that’s a good thing, and if we’ve never had to pay taxes on Netflix before, we’d probably do.”

Tyler Duncan says he agrees with the idea of ​​paying a little more for Netflix to help boost the county’s economy. (Austin Grabish / CBC)

The PST is already bundled on streaming services like Crave because they already have a physical presence in Canada. Amazon Prime users were already paying the PST because the company voluntarily collected it and sent the tax to the county.

Under current rules in Manitoba, foreign digital companies without a physical presence in the province can sell goods and services without imposing a provincial sales tax or federal sales tax.

British Columbia, Saskatchewan and Quebec already require foreign digital service providers to register for and collect regional sales tax on services.

The federal government indicated in Autumn Economic Statement It has planned to require multinational corporations to collect a Goods and Services Tax or Harmonized Sales Tax (HST) on digital products and services starting July 2021.

The move is expected to bring in an additional $ 1.2 billion in revenue for Ottawa over the next five years.

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