Digital Policy Salon: Budget 2021 Special Issue

This budget strikes the right balance between inclusive economic growth and job creation while maintaining focus on climate action. Advancing investments in youth and adult training and skill development are key to empowering an adaptable workforce that can thrive in an era of mass digital disruption. This future workforce must be equipped with accessible and clear data needed to make informed decisions and robust digital infrastructure required to participate in the economy and leverage opportunities.

A successful economic rebound is inherently inclusive and equitable, acknowledging and remedying historical inequities and actively working to drive positive change and an entrepreneurial spirit among underrepresented groups. Supporting and empowering consumers and businesses on this journey is also crucial.

This last year has been challenging and unprecedented. Canadians have lived through the most significant economic downturn in recent history, yet despite these hurdles, the digital economy has remained strong. Resilient and rapidly scaling, Canada’s digital economy is supported in the 2021 Federal Budget, and it will continue to be a driver of innovation, growth, and opportunity.

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COVID-19 response measures have dramatically impacted on the Canadian economy:

This report, done in partnership with ventureLAB, a Markham, Ont.-based technology hub, proposes that a resilient post-COVID Canadian economic recovery will depend on the success of Canadian-grown small and medium sized businesses (SMEs) and their ability to compete on the global stage.

Innovative and timely incentives for Intellectual Property (IP) development, a business culture that rapidly responds to opportunities, and a tailored investment-attraction strategy are critical to advancing a competitive Canadian economy.

Read the full overview here 📝

ICTC’s Smart Energy and Environment Policy Roundtable on December 3rd, 2020, was the second event in a series on creating a vibrant and inclusive smart economy for Canada. Dr. Sarah Burch, Canada Research Chair in Sustainability Governance and Innovation, and Sonya Hull, a leader in smart infrastructure and digital grids at Siemens Canada Ltd., opened the discussion with two presentations on Canada’s energy future. In the event’s second hour, an invited group of 30+ attendees from industry, government, academic institutions, and civil sector organizations were led in discussion by ICTC facilitators. Participants were broken up into four smaller discussion groups with a series of challenge-based questions to address.

Together, the speakers and roundtable participants discussed environmental priorities for federal, provincial, and local policy; technology needs for energy transitions; and community-led initiatives for a sustainable future for Canada. This policy brief distills the priorities outlined by roundtable attendees. The event highlighted the need for coordination and targeted efforts from all levels of Canadian society, including strong collaboration between the public and private sectors, inter-provincial agreements and infrastructure, and community-driven energy generation.

Read the full report here 📖

The plans will increase funds for broadband, small business tech use, and promoting quantum tech and genomics,

The Liberal government will target Big Tech with a $3.4-billion digital services tax, despite some experts warning that such a move carries the risk of retaliatory tariffs from the United States.

At the same time, the government will invest in broadband connectivity, digital adoption by small businesses, and strategies to promote such sectors as quantum technologies and genomics.

While the federal budget features a variety of technology-related investments, perhaps most notable was its proposed Digital Services Tax, which is expected to yield $3.4 billion by 2026. The budget describes a “tax at a rate of 3 percent on revenue from digital services that rely on data and content contributions from Canadian users.” Notably, the tax would apply only to companies with gross revenue of 750 million Euros or more, meaning that it would predominantly apply to large multinational companies. The proposed tax would take the form of a sort of corporate tax on the profits of digital companies (as outlined in this ICTC article), though the details thus far (for example, the definitions of terms like digital services and the implementation of the tax itself) remain vague yet critical.

The proposed digital services tax has international implications. Earlier this year, after disputes between Facebook and the Government of Australia due to proposed changes to journalism laws, Canada announced that it would seek to emulate Australia’s stance, and this tax appears to be evidence of a consistent Canadian approach to the so-called “digital giants.” The OECD, meanwhile, is working on a “Unified Approach” for large digital economy companies that “would ensure a company is taxable in a jurisdiction where its sales exceed a certain threshold even if it is not physically present in that market.” Given this, Canada’s proposed Digital Services Tax could be a catalyst, helping to demonstrate international appetite for such taxes, or it could be sticking point: as the article notes, the United States has suggested that it may implement tariffs on countries that adopt their own digital services taxes. Either way, it is possible that multilateral work on a digital tax could be developed before Canada’s proposed tax – which would only apply as of 2022 – ever comes to fruition. - Khiran O'Neill