Rural broadband, new tax rules among industry pre-budget asks

As the Liberal government unveils its last budget before the upcoming federal election, companies and industry groups will be watching to see if this is the year they’re finally granted some of the requests they’ve been making for years. Various parties are suggesting changes like new tax rules for digital services and more money for rural broadband, among other suggestions. They’ll find out whether the government agreed to implement any of them when the 2019 budget is tabled in the House of Commons around 4 p.m. Tuesday. One request the industry has been making for years that likely won’t be in the budget is an increase in the capital cost allowance rate that businesses can claim for depreciable expenses on telecommunications equipment. That’s because the fall economic update already announced the Accelerated Investment Incentive, which allows telecoms to make a larger upfront tax deduction for depreciation of asset investments. Another request put in by both the Canadian Wireless Telecommunications Association (CWTA) and Rogers Communications Inc. in their pre-budget submissions was taxation parity for online services. Currently, digital services like streaming platforms are subject to sales tax if they have a physical presence in Canada, but not if they operate outside of the country, like Netflix Inc. “In the process, these foreign companies effectively enjoy an unfair price advantage of up to 15% compared to their domestic counterparts,” the CWTA submission said, recommending the budget “commit to ensuring taxation parity among all suppliers of digital goods in Canada, removing the competitive advantage currently enjoyed by foreign firms.” Granting that request would be a surprise move from the government, especially in an election year. It has maintained it won’t put in place a “Netflix tax” since the Conservatives made it an election issue the last time around. On the telecom side, Rogers and Shaw Communications Inc. have also asked the federal government to make it easier for telecoms to access infrastructure such as roads and utility poles as they deploy 5G networks, and to give the CRTC regulatory oversight over infrastructure. But that’s an issue that might end up addressed by the review of the broadcasting and telecom acts, where it’s also under debate. Rural broadband is also a hot topic in that review, though rural broadband measures have been included in previous budgets, and some, including the NDP, think they should be in this year’s as well. In its pre-budget submission, SouthWestern Integrated Fibre Technology Inc. (SWIFT) repeated its call for changes to the CRTC’s rural broadband funding model, and said the government should put in place new and stable funding for rural broadband instead of funding different programs that each last for only a few years, like the current Connect to Innovate program. “All of this funding was or will be delivered in short-term, non-scalable program initiatives that have often served to further entrench telecommunications monopolies and have, so far, failed to address long-term broadband infrastructure needs,” SWIFT said. Shaw also brought up rural broadband in its submission, asking that “government convene interested stakeholders such as provincial governments and industry leaders to explore developing a pan-Canadian broadband strategy and fund. This strategic fund would look to address the remaining gaps in service, which are having a significant impact on the productivity and competitiveness of our rural and remote communities.” Telus Corp. used its submission to again emphasize the importance of 3.5 GHz spectrum. It asked the government to accelerate the timeline for the auction of that spectrum, currently scheduled for 2020. Telus would like that process sped up to enable “cross-Canada deployment for all industry players by 2020.” Its other requests included support for the ehealth sector, including “the national adoption of digital healthcare solutions through pilots and partnerships with provincial and territorial governments and the private sector, including continued support for the Canadian Health Infoway.” Telus’ ehealth division has launched a number of health apps in the past few years, with its most recent one offering doctors’ appointments via video. Other asks groups made ahead of the budget have also been brought up by various parties in the past. That includes a call by to Society of Composers, Authors and Music Publishers of Canada (SOCAN) to extend copyright terms to 70 years, extend the private copying regime and repeal a rule that says radio stations don’t have to pay royalties on their first $1.25 million in advertising revenue. Friends of Canadian Broadcasting also again asked the government to eliminate the ability to deduct taxes from spending on advertising on foreign digital platforms, the Association of Canadian Advertisers brought up concerns about Bill S-228, which looks to dramatically reduce junk food advertising to children, and the Canadian Association of Broadcasters (CAB) asked for broadcasters to be reimbursed for moving them out of 600 MHz spectrum to make it available for wireless use. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Rural broadband, new tax rules among industry pre-budget asks

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