Don't Bring Back the Netflix Tax

A serious campaign is underway in Ottawa to restore a tax on every Netflix and Disney+ bill in the country, with supporters calling the repeal a pre-emptive capitulation to Washington that bought Canada nothing. This summer, the federal government moved to scrap the CRTC requirement that streaming services contribute part of their Canadian revenue to content funds, replacing it with $600 million a year in direct public funding.

Washington had listed the Online Streaming Act as a trade irritant, but the Canada-U.S. talks have since collapsed and the tariffs landed anyway, making the concession look pointless. Even so, cancelling the levy was the right policy.

Producers and broadcasters have spent decades treating mandated contributions as the cornerstone of cultural policy, so they see the proposed repeal as a loss for Canadian culture rather than a change in how it gets funded. Dozens of organizations wrote to Prime Minister Carney asking him to keep the contributions.

The Canadian Media Producers Association said the collapse of trade talks created an opening to bring the streamers back to the table on funding. Whether that opening exists is beside the point. The tax would not have delivered on its stated purpose, and more leverage to impose it does not change that.

Consider who would actually pay this tax. The CRTC based the contribution on Canadian revenue rather than profit. Because few people would cancel a streaming service over an extra dollar a month, platforms would have passed much of the levy on to subscribers. Spotify did exactly that in France in 2024, raising subscription prices after the government imposed a streaming tax and explicitly stating that was why.

The average Canadian household has roughly 3.5 video streaming subscriptions. Stack the levy across them, and you get a consumption tax on streaming, collected by Netflix and Disney+ instead of the Canada Revenue Agency. In other words, Canadians pay.

That was the political appeal: Every government would like to fund its priorities without putting the cost on its own books.

The pricing problem was only half of it. In May, just weeks before Ottawa announced its reversal, the CRTC raised the total contribution requirement to 15 percent of Canadian revenue. The new rate was three times the original, placing Canada near the top of the international range, behind only France.

France's rules are more demanding, but at least much of the obligation can be satisfied by financing productions the platforms themselves distribute. That gives Netflix an incentive to turn the regulatory cost into something its subscribers might watch.

Canada's framework largely broke that link by making streamers divide their contributions among five separate funds, each with its own eligibility rules and governance, while leaving only a narrow slice for Canadian programming on their own platforms. A meaningful share went toward productions destined for a Tuesday afternoon slot on a cable TV channel with viewership in the low thousands.

If Canadians are going to be taxed for watching Netflix and Disney+, the money should at least buy Canadian shows that appear on those platforms.

The Coalition for the Diversity of Cultural Expressions warns that a budget line is easier to cut than a legal obligation, and it is right about that. But the levy sidesteps the harder question: How much should the government spend on Canadian cultural production?

With the Netflix tax, Ottawa doesn’t have to decide. It can simply set a percentage and take whatever that percentage happens to generate as Canadians spend more or less on streaming. A budget appropriation reverses that logic. The government must then name a price, say what it expects to accomplish, and eventually defend the results—did Canadians get anything worthwhile for their money?

So the levy should stay dead. The open question is what we’re buying with the $600 million.

If Ottawa pours it into the same funds under the same allocation rules, it will have made the financing honest while changing nothing else. The new policy direction to the CRTC has yet to be published, so there’s still time to get it right.

The money is now the government's to direct. It should go toward productions Canadians will press play on.