Dispelling the Streaming Tax Myth -Another Perspective

 

Breaking Down the Streaming Tax Myth 

What's at Stake?

There have been a lot of opinions shared by various industry stakeholders regarding a general desire to make streamers pay their fair share and invest into the Canadian Production industry. On its surface, as a general statement, that sounds pretty virtuous - a principle we can all get behind but let's scratch beneath the surface. When it comes to funding the Canadian Screen Industry, these streamers are actually amongst the largest investors. Streamers invest into the industry in many ways and the sector relies on this investment to continue. It is a fragile ecosystem with many global competitors. If we impose an uncompetitive tax rate, that investment could be dramatically reduced by creating an economic disadvantage for our primary investors. Needless to say, this outcome would be catastrophic.

Frankly, we need the Streamers ongoing support in order to grow the Canadian industry. Netflix, Amazon Prime Video, Disney+, Apple TV+, and other online platforms invest in the Canadian film and television industry in a myriad of ways. Using Netflix as the primary example, it is easy to demonstrate major investment into Canadian Motion Picture businesses, development, and training. 

Case in Point, Netflix

Netflix hires Canadian production companies, crews, performers, soundstages writers and Canadian post-production facilities and VFX houses. From 2021 to 2024 Netflix invested 6.5 Billion into the Canadian economy.

*    35,000 Canadian cast and crew were hired.
*    Netflix has 650 full time employees in Canada and that number could grow.
*    Netflix has hired 41 Canadian production companies 
*   The  "Team Canada" approach (defined below) directly benefits Canadian                  producers.

Netflix also reports investing more than C$35 million in Canadian training and development initiatives and supporting over 1,400 Canadian creators and professionals. This number does not include significant investments made by the streamers into facilities such as this Training Centre in Calgary which opened in 2024. In its first two years of operation, this facility has driven scores of industry specific trainings to hundreds of industry professionals.

What is the Team Canada Approach? 

The Netflix Team Canada approach is poised to help grow the Canadian domestic production market in a significant way. Here's how it works: Team Canada productions originate from the Netflix Canada Content Team. Netflix Canada develops and commissions Canadian content made for the local market. The Content Team is based in Toronto and works to find great Canadian stories from Canadian talent, with a focus on drama and comedy series, and share them with the world.

Netflix is in the process of securing Canadian labour agreements with Canadian  IATSE Locals. With its 34,000 Canadian Members, IATSE is Canada's  largest supplier of motion picture artists, technicians and craftspeople. These new agreements have Team Canada components, which support further investment, development, and growth of Canadian content.

There is a polarizing debate in this country about whether foreign streamers should be required to contribute a percentage of their Canadian revenues to local content funds. Demands that the Government of Canada immediately impose a 15% Streaming Tax seem short-sighted in light of what took place when the tax rate was set at 5%. Proponents of this strategy seem to either miss or ignore the plot. Streamers are already investing in the domestic market in a massive way. The downside to imposing a 15% tax on them (that will presumably be paid by increases to the monthly bills that their Canadian subscribers pay) could have catastrophic outcomes to the Canadian Motion Picture Industry. 

Industry Divided? Why?

There has been quite a lot of noise made recently about applying tariffs or taxes to large streaming companies in order to more richly fund Canadian content. Lets face it, this strategy has failed and we have seen that the 5% streaming tax had to be abolished and replaced with a generous $600 million dollar contribution to the Canadian Production Industry. The 5% tax was seen by investors as an illegal trade tariff. In the period of its existence 2024 - 2026 the 5% streaming tax  produced no revenue for the Canadian Industry as litigation essentially put it on hold during that period. 

Many in our industry are not even aware of how the Netflix model, in particular the "Team Canada" approach, is a very attractive model designed to grow the Domestic market. This model has already been proven in South Korea which now has a 17.1 Billion Dollar industry. The model has also been very successful in the UK where the industry is forecast (in 2026) to sustain over 30,000 businesses. Domestic producers in those countries are greatly benefitting from this outside investment and are creating globally acclaimed, home-grown content.

What's the Solution?

Rather than raising the stakes in the media to try and embarrass the Canadian Government is a tactic that has already failed, perhaps there is a diplomatic solution. 

I believe there is a way for the industry to communicate with the Streamers and the Canadian Government to find fair and equitable ways for the Streamers to continue to contribute to the Canadian domestic market. We have a federal government that campaigned on their ability to find pragmatic solutions. Rather than taking a public stance against our Government, I believe the industry could bring a united and highly effective approach to this discussion.