Deputy Prime Minister and Minister of Finance of Canada Chrystia Freeland speaks to the news media before revealing the first fiscal update, Fall 2020 Economic Declaration, in Ottawa, Ontario, Canada, November 30, 2020. REUTERS / Blair Gable / File Photo
Canada’s first two-year budget to be presented to parliament on Monday proposes a sales tax on online platforms and e-commerce repositories, a tax on digital services for Web giants and a luxury tax on items such as yachts, government sources familiar with the document said.
It will not include a wealth tax, a tax sought by the opposition New Democrats. Liberal Prime Minister Justin Trudeau’s budget will need the support of at least one opposition group to pass.
“The government is not advancing now with a wealth tax,” a government source told Reuters. “We will take significant steps to close the gaps and combat tax evasion, and we will ask those who are doing well now to pay a little more.”
The budget will include a sales tax for online platforms and e-commerce repositories starting in July and a tax on digital services for large web companies starting January 1, 2022, both measures originally promised last year.
Online platforms include foreign vendors without a physical presence in Canada that sell products such as mobile applications and online video games. E-commerce storage is the storage of physical goods before they are sold online.
A luxury tax on new cars and private aircraft worth more than C $ 100,000 ($ 79,970) and boats worth more than C $ 250,000 will take effect next year if the budget is passed. RVs and snowmobiles would be exempt.
With the growth of the country’s real estate market, the government is proposing to tax vacant residential properties owned by non-resident and non-Canadian homeowners as of January 1, 2022, sources said.
There will also be an effort to counter the jurisdictional purchases of large and profitable companies trying to artificially reduce their tax obligations in Canada, sources said.
Starting in 2023, Canada will aim to limit the amount of excessive interest expenses that can be deducted from profits, although small businesses will be exempted.
In 2022 or 2023, the budget will propose limiting the ability of multinational companies to artificially build agreements between countries that end up reducing their tax rates in Canada.
Sources did not provide details. Finance Minister Chrystia Freeland is due to present the budget on Monday at around 4 pm (2000 GMT).
Offering the first budget since taking office as finance minister last year, Freeland has pledged up to $ 100 billion in three years to “start” an economic recovery in what is likely an election year. Read more
Separately, the Toronto Star reported on Sunday that Canada will allocate C $ 12 billion in the budget to extend its main pandemic support measures, as much of the country is battling a third virulent wave of COVID-19 infections. Read more
($ 1 = $ 1,2504)
Our standards: Thomson Reuters’ principles of trust.