The Problem with Netflix

A notice from the Canadian Audio-Visual Certification Office was what started the fire. And rightly so! In this notice about television production companies eligible for Canadian tax credits, the office referenced a certain number of examples. Among those chosen for eligibility, however, is the American online video service Netflix.

You’ve heard of Netflix, of course. You are probably subscribed, like approximately 4.5 million Canadians — myself one of them— who, year after year since 2010 when Netflix was established in Canada, send at the rate of $7.99 or $9.99 per month, just over $500 million in revenue to Netflix, whose headquarters is in Los Gatos, California.

Despite the half billion dollars collected annually in our beautiful Canada, Netflix does not pay a cent of taxes to the Canadian government, which ignited the uproar. Through a notice from CAVCO, those in the television industry learned that Netflix would be entitled to tax credits like the good Canadian citizen of a business that it is not.

All were outraged upon discovering that not only does Netflix grow richer at our expense without paying the price, but in accordance with CAVCO, Canadian taxpayers would have to subsidize it and help it weaken Canadian content. Did I hear a whip crack?

Minister of Canadian Heritage Mélanie Joly hastened to rectify the damage by denying Netflix’s eligibility for tax credits. Except that … if by chance Netflix comes to film a TV series in Montreal, [for instance, or to] consult on the text written by my colleague Hugo Dumas, based on a script written by local authors, directed by a local director and performed by local actors, it is clear that Netflix, as a production company and not a distributor, will be entitled to tax credits like any other foreign production company that films in our country.

But that is not the problem.

The real problem is that, here as elsewhere, Netflix is a part of the companies of the new economy — such as Google, Amazon, Airbnb and Uber — that do not contribute to the system that cultivates them.

The real problem is that the former Harper administration opposed all tax on Netflix, and the Trudeau administration seems in no hurry to impose this tax either. Still, even in this moment, practically all over the world where Netflix is established, some raise their voices to call out the unfair competition. Slowly but surely, the administrations are organizing and legislating in favor of a Netflix tax.

According to Director General of the Canadian Coalition for Cultural Diversity Charles Vallerand, the tendency at the moment leans heavily toward a call to order for Netflix [to show responsibility], from which more and more countries demand its contribution to the fiscal responsibility plan.

For instance, if all goes as predicted in Australia in July, a Netflix tax will be implemented that should bring the country approximately $350 million within four years. New Zealand is considering a similar tax. During that time, France and Germany await the European Commission’s decision as to whether or not the obligation for foreign video providers such as Netflix to contribute to a support fund for the national film industry violates European law.

Certainly, the good old days of Netflix’s free and unrestrained market occupation may be numbered. But the laws are slow. To accelerate things, perhaps the subscribers, and I include myself in this contingent, need to wake up and be conscious of what they are buying each month.

At first glance, the $7.99 or $9.99 monthly rates appear negligible, faced with Netflix’s numerous advantages: the richness of its catalog, the diversity of its offerings, fantastic television series, unique documentaries, small, independent films that one would never have watched otherwise or mainstream films that are a pleasure to watch again and again, and all of this with a quick and miraculous accessibility. But the miracle of Netflix has a price. Not for its subscribers, but for the culture of the countries where these subscribers live.

Because of Netflix, people are watching television, especially local productions, less. The ratings for these productions are plummeting, which leads to the drop of budgets for future productions. And this is how an entire industry of local content grows poorer and weaker and runs the risk of disappearing one day. Is this truly Netflix subscribers’ wish? I wholeheartedly hope not.