COLUMN: On Parliament Hill – Elbows up or down – DST (Digital Services Tax)

Let’s talk about the Digital Services Tax (DST). This tax was passed in June 2024 by the Liberal/NDP government, taking effect on June 30, 2025. Companies like Amazon, Google, Facebook, Uber, and Airbnb were required to complete a return by June 30, retroactive to 2022.

The Parliamentary Budget Office estimated the revenue from this tax to be $7.2 billion over the duration of five years. But at what cost?

During critical trade negotiations with the US, it became apparent that implementing this tax would be counterintuitive to a deal. Our actions were being perceived as a direct attack on the U.S. That’s how many interpreted Canada’s persistence with this tax.

Katherine Tai, United States Trade Representative, raised her concerns as an official complaint under the CUSMA (Canada-United States-Mexico Agreement), stating that the tax unfairly discriminates against American companies. Others agreed. In 2023, a U.S. Congress committee called the tax “unusually aggressive.” Both Democrats and Republicans were upset by our intentions.

While there was already resistance to the digital tax under President Biden, President Trump signed an Executive Order on his very first day, withdrawing the U.S. from any digital tax rules established by international agencies. The wording of the executive order clearly addressed such initiatives in Europe like France and the UK, but Law Professor Michael Geist of the University of Ottawa saw the executive order as a direct response to Canada’s digital service tax.

Many Canadian voices were also sounding the alarms on the DST. The Business Council of Canada and the Canadian Chamber of Commerce warned of the potential repercussions. Premiers and Business leaders expressed their concerns. Even former Liberal Minister of Foreign Affairs Lloyd Axworthy chimed in with some strong opinions on how this was all being handled, adding that current trade negotiations were being done “in secret” with “no parliamentary scrutiny”. Ultimately, the outcome of these seemingly uncalculated steps risked the continuation of tariffs on Canadian goods.

Right up until two days before the June 30 deadline, the finance minister insisted that the tax would remain in place as Canadians recalled the repeated refrain of Prime Minister Carney, chanting “elbows-up”.

Then, suddenly, Mr. Trump posted on social media that all discussions were terminated, effective immediately. President Trump called Canada’s insistence on the DST foolish and deemed Canada a very difficult country to deal with.

And then the tides changed.

In the 11th hour, Prime Minister Carney lowered his elbows and cancelled the DST. The White House Press Secretary Karoline Leavitt summed up the Trump government’s perception of what happened: “It’s very simple. Prime Minister Carney and Canada caved to President Trump and the United States of America.” Some Canadians thought the same. Diane Francis of the Financial Post called Prime Minister Carney’s response a rookie move.

Whether the PM’s actions were those of a rookie or if he succumbed to the pressure of a social media post is uncertain. What remains are unanswered questions.

That is, what was given in exchange? Did the U.S. immediately rescind softwood lumber tariffs? Did we make gains for our workers in these talks? Did we position ourselves toward a greater position of strength?

It certainly doesn’t seem so. Any hope for the DST to have been used positively in negotiations from a position of strength seems moot.

Former Cabinet Minister Perrin Beatty, who later became the CEO of the Canadian Chamber of Commerce, said the resulting impact of implementing the tax amid talks put us on the defensive. It handed ‘President Trump a convenient stick of which to beat us.’

It’s disappointing for those of us who know of the incredible potential we have in Canada. The last 10 years of Liberal policies have not positioned us well economically. However, we can reverse that by starting to bolster our economy.

To do so, we need to fully repeal the No-Pipelines Law, the industrial carbon tax, the West Coast tanker ban, and the emissions cap. Additionally, we must scrap the EV mandate and axe the capital gains tax on reinvestments in Canada. That’s how we put Canada first.

Putting Canada first remains our Conservative goal.