Photo:AP
Canada recently cancelled a planned 3% digital services tax—which was expected to collect money from big tech companies starting July 2025—just hours before the first payment was due. Economist Julian Karaguesian, a former advisor to Canada’s Finance Minister, called this move a “mini‑win” that strategically helped Canada in trade talks with the U.S.
He explained that Canada held on to the tax until the very last minute to make it look like a real gain for the U.S. once they dropped it. This way, Prime Minister Mark Carney could say it was fair, while still using the decision as leverage in wider negotiations .
Karaguesian added that Canada faces strong pressure from powerful trade partners and must balance its sovereignty—making its own rules—with influence from much bigger economies.
Here’s why this matters:
Negotiation strength: Dropping the tax was a bargaining chip, helping restart stalled U.S. trade talks.
Economic leverage: It kept Canada in control—dropping the tax was a move to gain favorable trade terms.
Tax strategy spotlight: The timing showed how digital taxes can be used in global talks without losing all influence.
Background details:
The tax was meant to raise about CA $7.2 billion over five years from digital services in Canada.
It was retroactive, applying to earnings back to January 2022 .
The U.S. threatened to stop trade talks, leading Canada to act quickly.
After Canada dropped the tax, negotiations resumed with hopes of finalizing a deal by July 21, 2025.
Still, some Canadians worry the country may be too influenced by U.S. pressure, especially since “domestic policy” was affected .
What’s next:
Canada will officially repeal the tax in Parliament this summer.
Trade talks between Canada and the U.S. will aim for a detailed economic and security deal by July 21.
Other countries considering similar digital taxes—like in Europe—are watching this situation closely.
In the end, although dropping the tax seems like a loss, experts see it as a calculated move that gives Canada room to negotiate better terms. It shows how countries use timing and strategy to protect their interests even when making concessions.
Quebec’s iconic Winter Carnival expects record crowds this year as more Canadians travel domesticall
China’s highest court has overturned the death sentence of Canadian Robert Lloyd Schellenberg, signa
A Calgary man says his home has been repeatedly targeted in four attacks over six days, leaving him
Mexican authorities have found bodies and remains in Sinaloa during the search for 10 missing employ
