Wyatt Clunock explains why the Digital Services Tax is not a win for Canada and why it's actually a disaster. He also explains why Canada should have never passed the DST in the first place.
00:00:03.080Ever since Prime Minister Mark Carney and his liberal government objectively caved to President Donald Trump of the United States on the digital services tax in order to get back to the trade negotiation table,
00:00:15.600the liberals online, in the media, and in the party itself have been spinning overtime in order to try and make this seem like a big liberal victory.
00:00:25.760It wasn't. It was deeply embarrassing to the country. I have said it many times before.
00:00:31.400We should have never passed the digital services tax in the first place.
00:00:35.240We should have never attempted to implement it during trade negotiations.
00:00:38.960And then we looked really stupid when it took Donald Trump forcing us to drop it for us to actually get rid of it.
00:00:45.400It was a tax that was already bad for Canadians.
00:00:48.140And then you implemented it during a trade negotiation when it's effectively just a tariff on U.S. tech firms.
00:00:54.120It was obviously a major fumble for the liberal government who thought they could get away with something like this,
00:01:01.340thinking that the U.S. wanted to sign a trade deal so desperately that they were just going to put up with it.
00:03:41.600That's not going to stop Trump from demanding more because that was not even something he assumed that he was going to have to ask us to get rid of because we just started implementing something.
00:03:51.420Then negotiation for no reason that wasn't a direct attack on his economy.
00:03:58.180But that wasn't the piece of media from CTV News that I want to cover today.
00:04:03.060I want to cover this other interview they put up just a couple days ago, and they brought on an economics expert to talk about how this was actually a win-win if you think about it.
00:04:15.020The headline from this is mini-win for Canada as digital services tax dropped experts said.
00:04:22.360This was not a win, but I need to take you through this interview because it's embarrassing.
00:04:27.500It's embarrassingly silly to be pretending like this was a mini-win by us being chastised on doing exactly what Donald Trump said when we previously thought we were going to be able to weather the storm and keep the DST in place effectively just so Carney can reduce the deficit.
00:04:43.880We are running a $90 billion deficit this year, and he needed an extra $7 or $8 billion from the retroactive tax that was then going to continue in the future in order to make himself look like what he was advertising during the federal election.
00:04:56.560Somebody who was going to put Canada's fiscal house back in order.
00:05:02.780He is very much not in control when it comes to the economics of the country, which is hilarious because his whole thing is he's a good economist, apparently.
00:05:11.620Mark Carney's whole thing is he was Trudeau's economic advisor, the governor of the Bank of Canada in England.
00:05:17.740He brought massive profits to Brookfield Asset Management.
00:05:20.980The problem with Brookfield Asset Management, though, is if you actually look into them, a lot of their money comes from government contracts.
00:05:28.500It comes from being within industries early that the government subsidizes.
00:05:33.760It's not because of keen business acumen of Mark Carney cornering a market where there was high demand.
00:05:40.800Brookfield Asset Management would find industries that the government was throwing billions of dollars at, whether you were productive or not, and then they made money doing that.
00:05:48.800But now let's get into this interview.
00:05:50.420Now is Julian Karagassian, economist, pardon me, and former special advisor at the Ministry of Finance.
00:07:21.960Well, you know, the marketing boards, the supply management, that's what we need to get rid of in order to get a good trade deal with the United States.
00:07:27.820Trump doesn't want to trade with us unless we get rid of the crazy tariffs on dairy, cheese, and other products, chicken, whatnot.
00:07:35.900And that's what he's still driving towards.
00:07:37.300The other media is actually being more honest and saying that Trump actually has a good chance of getting us to at least heavily modify the supply management system so some U.S. products can start entering.
00:07:47.300But him saying we've strategically given a concession to look, you know, to make ourselves seem friendly to the U.S.
00:08:01.100But apparently this is like, I don't know what, like, the fact that he worked for the Ministry of Finance probably under the Liberals is probably a good sign that this guy's delusional.
00:08:11.900We also had to back win there as we head towards this July 21st date.
00:08:17.840So there's, I think there's a mini win there.
00:08:20.440We also had to back down publicly and give in on this tax.
00:08:25.560But I think that was a good strategic, good tactical maneuver by the prime minister.
00:08:30.080Now, the parliamentary budget office had estimated that this isn't exactly the retreat from Dunkirk in terms of it being like a tactical victory in terms of us reconsolidating ourselves.
00:08:44.020It's like if we had a, we like sent a bunch of tank columns down a road and they all got absolutely wiped out.
00:08:50.180We're like, well, we've made, we've lulled the enemy into a false sense of security by just doing something extremely stupid and getting punished for it.
00:08:58.520Tax would bring in more than $7 billion over five years.
00:09:02.880What does the loss of that revenue mean for Canada?
00:09:05.360Well, it's coming, you know, that loss of that potential loss of revenues coming at a time where we have incredibly large challenges and pressures on federal and provincial budgets.
00:09:18.560We've got pressure, obviously, coming right from Washington to boost our defense spending sharply to 5% of GDP.
00:09:24.740We have pressures from healthcare on transfers, payments right across the board.
00:09:30.340And also there's a, there's a sovereignty issue as a sovereign nation.
00:09:35.040The, the digital tax, the digital services tax, that's a domestic policy.
00:09:39.540And so what we're seeing from the, it's a domestic policy, but in fact, every policy could be argued as domestic policy.
00:09:47.380Other than Shopify and some very small tech firms that operate from Canada, I guess Ubisoft would be paying the digital services tax, but who, we don't really have big tech giants exactly outside of Shopify.
00:10:01.740The U.S. has Apple, it has Amazon, Google, many other, Facebook, we have Uber, they all operate in Canada.
00:10:10.060And so we were going to take 3% more of their revenues on top of the corporate tax they already pay, on top of the other regulations that they have to follow that cost them a lot of money.
00:10:19.900They, we are, we're going to implement a 3% higher corporate tax on them.
00:10:24.920And we're considering this a domestic, purely domestic policy, even though 90% of the tax is going to be paid by American firms.
00:10:32.280It's obviously a tariff that has this backward justification of us saying, no, no, no, it's domestic because it's, it also affects Shopify.
00:10:39.760We were in the middle of negotiation, negotiating with the EU to give them a loophole around the DST.
00:10:47.380So at the same time, we passed it saying, well, it applies to everybody equally.
00:10:50.720We were immediately telling the Europeans how to get out of it, which made it seem like we were just attacking the Americans, probably because they were.
00:10:57.060Trump White House says they're telling their allies that you have no sovereignty over your domestic policy.
00:11:02.580We will use leverage in terms of access to our market to cancel any policy that we believe interferes with our business interests.
00:11:13.460Now, he says that, but we have supply management that blocks so many agricultural goods from the United States entering Canada.
00:11:24.120We are the only country on the planet outside of like communist dictatorships that have such a backwards way of doing agricultural policy with supply management.
00:11:43.880Because the wording of it sounds very, you know, pro-Canada.
00:11:48.660Well, it's a domestic policy because it's about trying to help Canadian farmers.
00:11:51.960It's also trying to prevent American farmers from being able to sell into here.
00:11:55.940It's also trying to prevent Canadian farmers not in the quota system from being able to produce eggs, milk, cheese, dairy, any dairy products, chicken.
00:12:05.760The thing is that it's a burden on us.
00:12:08.040So if Trump is somehow able to get rid of supply management in our country through trade pressures, more power to him in my mind.
00:12:14.580Well, let's talk about interprovincial trade barriers.
00:12:17.480They have been removed, at least at the federal level.
00:12:21.380How much of a boost to the economy are we potentially looking at?
00:12:26.100I think, by the way, the trade barriers have not been removed.
00:12:29.300The biggest trade barrier is supply management that is guaranteeing a certain supply of the market, a certain portion of the market, a certain amount that certain farmers are allowed to sell into the market.
00:12:42.560And they're all from Ontario and Quebec pretty much.
00:12:44.920So the problem is that the biggest interprovincial trade barrier is the fact that we guarantee certain amounts of business to farmers in certain provinces.
00:12:53.340We guarantee that provinces are allowed to shut down pipelines if it comes into their jurisdiction, even though it's affecting the entire Canadian economy if they're saying no.
00:13:01.980We are guaranteeing First Nation ban councils endless consultations for any project that is even in their vague territories.
00:13:12.780I say vague because we have this crazy concept of title land in Undrip in Canada that we follow that allows bans to constantly claim that their territories are bigger and bigger and bigger and that, you know, mining companies and oil and gas companies need to speak to them in order to get approval for that project, which really just turns into like a shakedown.
00:13:33.100From the removal of so-called federal barriers to provincial trade, I think those are largely symbolic in terms of direct barriers to trade.
00:13:43.000But the feds have incredible influence in tax spending and borrowing powers to promote infrastructure, to promote competition policy right across the economy.
00:13:53.280In terms of the boosts to the economy, if all provinces and territories were to actually eliminate the most egregious interprovincial trade barriers, I don't think the sum would come to $200 billion a year, as we've seen.
00:14:08.560But it will allow us to increase our productivity.
00:14:12.840It will create for the first time in Canadian history a truly internal economy.
00:14:17.840It will allow people to move more easily across the country.
00:14:20.840But I think it's only a small part of the puzzle or of the new economic model that we need to create for the 21st century, because our current model sells a lot of stuff to the big neighbor next door.
00:14:36.800And so we need to create a new 21st century economic model based on that.
00:14:41.400And the thing is there, I actually kind of largely agree with some of the things he's saying about, you know, that we need to knock down a lot of the provincial barriers.
00:14:51.500And if we do that, we can actually gain massive amounts of productivity.
00:14:55.240But again, he is missing out that we are the federal supply management system is the biggest trade barrier in Canada.
00:15:01.320It's telling which farmers are allowed to produce things and which are not allowed to produce things, which tends to be very regional.
00:15:07.640Again, Quebec dairy farmers profit from the system, but not Alberta or Saskatchewan dairy farmers.
00:15:13.600They have very limited supply that they're allowed to put into the system where the Quebec dairy farmers and some in Ontario are allowed to add in massive amounts.
00:15:22.580And even then, they're even held back because there's still a cap.
00:15:27.020And so when we're talking about all of this, and then we're talking about how the current system of us trading with our neighbors to the south is under attack, it's, but by who?
00:15:53.320So when we start getting mad at them that they want to have a 10% across the board tariff, it's very hypocritical when we have 250% tariffs on specific products that are actually produced quite a bit in the neighboring border states.
00:16:07.260You think Wisconsin doesn't have a lot of cheese that it would sell into Canada if the giant cheese tariff wasn't there?
00:16:13.820They probably would, but we've blocked them.
00:16:15.860And so Trump rightfully is allowed to be mad that there is this hypocrisy in Canada that we're allowed to protect our own economy, but they're not allowed to protect their economy.
00:16:27.220It's actually bad for your economy to have tariffs on the other guy.
00:16:30.180So in doing this, by putting pressure on Canada, we'll actually make a trade more free on both sides of the border, which is the right thing to do.
00:16:38.320But yeah, overall, the media, though, has been just pretending that the liberal government's been doing more than it has been.
00:16:46.360Their interprovincial trade barrier legislation with Bill C-5 trying to reduce barriers, trying to basically give cabinet the approval to just say yes to projects.
00:16:58.120And I understand why the conservatives voted for Bill C-5.
00:17:00.980It's basically saying to the liberals, here you guys go.
00:17:03.720You guys get to have the power in order to fast track projects that you like through cabinet by saying all the regulations and restrictions are out of the way for this project because we like it.
00:17:14.620And see how many projects they actually approve.
00:17:16.620I guarantee, based on their own ideology, they are going to be very sluggish because the liberals are protectionists at heart.
00:17:23.980And when I say protectionists, I mean interprovincial protectionists.
00:17:27.260They want projects for Quebec and Ontario.
00:17:30.260They do not want projects for Alberta and Saskatchewan.
00:17:33.580They don't really care about those projects.
00:17:35.460They have a base, a constituency that they're going to serve.
00:17:38.180And within that constituency are also environmental activists, indigenous activists who do not want productivity, who do not want more projects.
00:17:48.660And so, but the media, again, is doing this thing, pretending like some big coup has happened.
00:17:53.200And we're now going to start firing on all cylinders.
00:17:56.000Again, what Carney has done, he has symbolically pretended like he wants to get something done.
00:17:59.880He has just outsourced the blame to the provinces, to indigenous groups, to environmental groups, and says, I'm going to say yes, but they have to say yes, too.
00:18:06.320It's a Weasley tactic to say that, yes, I'm going to say yes, but everyone has to be in consensus, knowing that a few of those parties are never going to say yes, even though he could actually overrule them.
00:18:19.420But anyways, that should be it for me today, guys.
00:18:22.220I'll probably have to keep covering this DST thing over time because it is a big story and it is flavoring how the trade negotiations are going to go.
00:18:31.120Again, getting rid of the DST was not a mini win.
00:19:02.600Carney's trying to ballyhoo this middle class tax cut he's giving out.
00:19:08.560Again, we had leftists saying the 3% revenue tax on digital service companies, like anyone selling digital services or goods, Amazon, Uber, Google, Shopify.
00:19:20.620It was only 3%, while Carney only lowered taxes 1% under $50,000.
00:19:27.580You don't even pay taxes on the first $18,000 to $19,000 of your income.
00:19:33.140And we're considering this a big deal?
00:19:34.640They put out this ridiculous math where they're like, hmm, the average Canadian family is going to go into Ireland.
00:19:40.920A Canadian family can save up to $830 on their taxes.
00:19:46.720Actually, when they did more proper estimates about how much the real average person is going to get back from this, it's about $230.
00:19:53.240You know, basically, don't buy Starbucks for a month if that's your coffee of choice and you've saved the amount of money that Mark Carney was generously giving you back.
00:20:04.340But anyways, now I'm just rambling again.
00:20:06.400Anyway, so guys, make sure to like the video, subscribe to the channel, leave a comment, do all that fun stuff.