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globe editorial

When Ottawa recently announced that it will not force Netflix to collect Canadian sales taxes, a lot of people in the culture business who compete with the American online streaming giant complained about the unfairness of it.

Since then, the Quebec government has said it will collect the taxes, and Jagmeet Singh, the new federal NDP leader, has announced that, if his party took power, it would do the same.

There's nothing objectively wrong with this. Sales taxes applied to a cable package or a movie ticket also should apply to content that's purchased online. But if taxing an offshore company that sells no tangible product and has zero physical presence in our country were straightforward, it would have been done long ago.

You can rue the borderless nature of the Internet. But the real issue boils down to domestic and international tax provisions.

Technically, sales taxes already apply to Netflix. Under the law, Canadian subscribers should self-report. But that isn't happening, and Ottawa has admitted enforcement is currently impossible. That said, there is a serious discussion to be had regarding tax fairness in the digital economy.

Tech giants like Netflix and Uber are innovators, but they were partly built by exploiting statutory loopholes. They will co-operate with local jurisdictions if compelled, but that involves a broader conversation about modifying national tax codes and the international frameworks that flow from them.

The Organization for Economic Co-operation and Development, which began tackling the sales-tax issue in 2013, says that dealing with stateless income depends on international co-ordination and transparency, which in turn requires the political will to close various loopholes.

Experts also caution that, unless care is taken, attempts at reforming the international order risk being monopolized by a small club of wealthy countries and skewed to their advantage.

None of which makes it less worthy an enterprise. But beware politicians selling simple solutions to complicated problems.