The Google Tax: good or bad idea?
- Posted by daige
- On 2017-04-07
- 0 Comments
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Hi everyone, it’s David Grégoire for Mr.Ecommerce.com. I wanted to react to a news that my friend Stéphane Ricoul of eCom Montreal, and now eCom Sherbrooke, Trois-Rivières, Rimouski … has published about a new Google Tax. Click here to view the article.
I will focus on the eCommerce part of this tax, because I find it does not make sense, despite what Peter Simons said last year at the Hop! salon of the CQCD.
First, you have to know about this statistic:
3 out of 4 dollars spent on the Internet by Quebecers is spent outside Quebec. It’s like this for two reasons:
The first reason: There’s no offer.
Try to get a spare part for your washer-dryer on the internet from a Quebec dealer, a replacement remote control for your television. Currently in Quebec and even in Canada, there are not enough traders who sell on the Internet. This is the first reason why we are forced to buy outside Québec on the Internet.
Second reason: It’s too expensive!
That’s what I’m going to focus on. Why is it too expensive? 2 reasons: GST-QST, you must pay 15% more than if you buy on an American site in addition of the shipping. As for the shipping, it costs 3-4 times more to ship a small parcel from Montreal to Quebec City than it is from Champlain, New York just across the border to Quebec City. Then, necessarily the Quebecers pays more if they buy local.
If there are more taxes that are charged to Amazon, one of the two following things will happen:
- Amazon will continue to sell to Quebecers and Quebec consumers will pay more. If that’s what it is, what’s going to happen? Quebec retailers will continue to close because people are buying more and more on the Internet.
- Amazon will not want to pay this tax and will prefer to withdraw from Canada. What’s going to happen? Quebec consumers will no longer have an offer because everything that isn’t offered on the on a Quebec website, the Quebec consumer will not be able to buy it overnight, of course . Will they actually go back to the traditional shops? I doubt it!
It’s fair to say, I think, it’s going to make the situation worse in Quebec.
An audacious proposal?
If, on the contrary, the taxes were removed on all Internet transactions in Quebec. This means that Peter Simons, who sells a dress to a Quebecer on the Internet, would no longer be charge GST / QST taxes. In his store, he continues to charge them, but on the internet no. What will it do?
First, there are more and more Quebec retailers that will sell on the internet because clearly, they will be more competitive level price. So they’re going to sell on the internet, necessarily.
And there are more Quebecers who will buy in local on the Internet!
There will be more offer, they will pay less or equal price with American sites so they will buy more on the local website.
Basically, at the same price, why buy on an American site when you can buy it here?
It’s just that right now, it’s impossible to do.
And then you will see my comparison:
I compare this to the Anti-Spam C28 Act that came out 3 years ago. That is completely ridiculous. The government is strictly looking at their treasury. The Anti-Spam Act currently prevents Quebec and Canadian merchants from using email marketing.
On the other hand, the foreign companies (yes there are partnerships with some countries) benefit from it. I receive daily SPAM from companies in India, China, Russia and elsewhere in the world. Currently, this legislation has placed our Quebec companies at a disadvantage.
The result: if there’s a Google Tax, I am convinced that it will disadvantage Quebec companies.
If there’s a Google Tax, it’s going to inflate the government’s short-term revenues because they’re going to get more revenue. But it will melt the sales of Quebec stores that provide employment.
So in the end, are we really going to earn money?
I don’t think so.
And will companies here benefit from that? I am convinced otherwise.
Do you seriously think that Amazon will want to pay a tax on their income?
The article says the government would rely on credit card transactions.
The reality is that if we spend $ 100 on Amazon, Amazon only keeps 10% and gives $ 90 to the merchant who is behind, who sold it via their platform.
Do you really trust Revenu Québec to be able to come into this process of convincing big American companies to pay more taxes here in Quebec?
What is your opinion? Leave it in the comments!