Freeland finds safety in numbers on digital sales tax

Finance Minister Chrystia Freeland isn’t showing signs of worry that the U.S. can now launch a trade challenge against the Liberal government’s controversial digital services tax.

The Liberals are slapping a three-per-cent tax on the Canadian revenues of digital giants, which will affect major U.S. tech companies such as Google and Apple.

The U.S. government formally challenged the tax under the Canada-U.S.-Mexico Agreement in August and as of today can now request a dispute-settlement panel to probe whether Canada’s new tax breaches the trilateral trade pact.

It’s not clear if President Joe Biden will move to do that in the waning days of his administration or leave it to Donald Trump, who takes over in January.

The first Trump administration was eyeing retaliatory measures against countries bringing in such taxes, and powerful Republicans in Congress have pushed for aggressive action against Canada.

But Freeland says some of Canada’s closest allies have brought in their own digital services taxes and not faced “direct consequences” from the U.S.