Aaron Henry, director of resource and environmental policy, Canadian Chamber of Commerce.
There is no shortage of hype and enthusiasm for artificial intelligence, internet of things applications and, of course, blockchain technologies; and nor should there be. These technologies bear significant social and economic promise.
While everyone clamours for insight into how these technologies will affect the future of work, another massive effect these technologies may have in store for Canada’s economy remains overlooked: how Canada’s natural resources will play a critical part in supporting that transformation.
The evolution of automation, remote working, digital currencies and services will pose significant challenges to Canada’s tax base and therefore the country’s ability to offer essential services. The ability of companies to move the revenues from their digital services from high-tax to low-tax jurisdictions has started to undermine government capacity to collect tax revenue.
By way of example, the revenues earned by digital platforms such as Amazon and Netflix services can be legally moved through “transfer pricing” mechanisms from one tax jurisdiction to another jurisdiction where the company has a national subsidiary.
In 2016, these transfer mechanisms meant that Netflix and Spotify avoided $52-million and $9.4-million respectively in sales tax in Canada.