Manitobans will be soon be paying more for Netflix and Spotify subscriptions, among others.
Beginning in December, streaming services, online accommodations and online marketplaces will be required to charge provincial sales tax, the province announced as part of its 2021-22 budget, which was unveiled Wednesday.
The new tax measure — often dubbed 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.
It will mean a stay at an Airbnb rental in Manitoba, a monthly subscription to a streaming service or buying products from third-party sellers on sites such as Amazon or Best Buy will be subject to Manitoba’s seven per cent PST.
That means a Netflix subscriber with a standard $14.99 monthly plan will pay an additional 90 cents per month, or roughly $11 per year, for the service.
“A lot of this is to level the playing field” for local businesses, which have always been subject to provincial taxes, Finance Minister Scott Fielding said during a Wednesday news conference.
“[Local businesses] are competing with other agencies that don’t have to pay the tax.”
He specifically mentioned local hotels, which have been hit hard by the pandemic, and must compete with Airbnb rentals that currently don’t charge a sales tax.
Manitobans previously paid sales tax when they brought products directly from online retailers, but third-party sellers on such sites haven’t had to collect PST until now.
It will also mean the PST is added to products bought through online marketplaces like Etsy, if the person is selling more than $10,000 worth of goods a year and is registered.
Private sales arranged through sites like Kijiji or Facebook Marketplace will not be subject to the tax.
The PST is already collected on streaming services like Crave because they already have a physical presence in Canada. Amazon Prime users were already paying PST because the company voluntarily collected it and remitted the tax to the province.
Under the current rules in Manitoba, foreign-based digital businesses that don’t have a physical presence in the province can sell goods and services without charging either the provincial sales tax or federal sales tax.
British Columbia, Saskatchewan and Quebec already require foreign digital service suppliers to register for, and collect, provincial sales tax on services.
The federal government signalled in its fall economic statement it planned to require multinationals to collect GST or the harmonized sales tax (HST) on digital products and services beginning in July 2021.
That move is expected to bring in $1.2 billion more in revenue for Ottawa over the next five years.