Thanks to Donald Trump, Canada’s Digital Sales Tax is gone. (Good.) All it took was for somebody to tell the US president what was going on up in Canada, there followed a frown and then, “Tell those people we’re done talking until they stop doing that.” .UPDATED: White House to resume trade talks after Ottawa dropped digital tax.That was easy. In fact, would Mr. Trump now address supply management?Talk about a complete capitulation. Couldn’t have been smoother if we were the 51st State..Shed no tears for the Digital Services Tax, by the way. This was a bad tax, one of Justin Trudeau’s ideas. Picture this: You ordered something online from Amazon, took a Uber to your Airbnb and settled down to watch something on Netflix; you also did business with online providers such as Apple, Google or Meta. As of today, Monday 30th June, you were going to be paying 3% in DST on all of it. However Trump, when informed that the Canadian tax was retroactive to 2022, and that meant US companies would be looking at a tax bill in the billions of dollars, said there would be no talks with Canada about tariffs as long as that tax measure remained in place. And that’s all it took.So, the president did us all a favour..Now, bad tax or not, there was a rationale for the DST. The Government of Canada helpfully explains, “the Digital Services Tax was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians. Canada’s preference has always been a multilateral agreement related to digital services taxation.”Revenues foregone by Revenue Canada were estimated to be as much as $7 billion over five years. “The DST was enacted to address the aforementioned taxation gap.”Two things about that, then.First, this was a complete rout for the Carney government. Not that we ever doubted who held all the cards in trade negotiations between Canada and the US, but Minister Champagne’s statement this morning should be read as an official admission:“Canada’s new government is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses. Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.”Will there be anything else, Mr. President?.Second, “the aforementioned taxation gap?” A gap? Between what and what? It’s like that other infamous taxman chatter, that a tax cut is a ‘revenue expenditure.’Work long enough for Revenue Canada and it alters your mind. You actually start to think that Canadians’ money is your money. So if you’re a tax man, a tax cut is personal… revenue expenditures hurt. It's like the finance minister is spending your money.And, if somebody isn’t paying a tax, well, that’s a ‘tax gap,’ right? Needs to be filled in with a tax.But wait, these were American companies, weren't they? Why would we care?Because the American companies don't pay the tax, they simply add it to your bill. Trump didn't save American companies the tax, he saved Canadian users of digital services paying their own government for the privilege of using an American supplier of digital services.Now about supply management... that's not 3%. The Government of Canada has to charge a 230% tariff to keep Canadian dairy producers competitive.Would somebody please tell Mr. Trump?
