Computer & Communication Industry Association
PublishedMay 2, 2024

New Study Finds Canadian Bill C-59 Could Cost U.S. Businesses up to $2.3 Billion Annually

Washington – A new analysis published by the CCIA Research Center finds that Canadian Bill C-59, which imposes a digital services tax of 3% on revenues from online marketplaces, online advertising, social media, and user data services, would cost U.S. businesses between $0.9 billion and $2.3 billion annually, leading to U.S. job losses that would impact between 1,207 and 3,140 American workers. These results suggest that not only would this lead to a reduction in export revenues and income for U.S. businesses and their shareholders, but would also reduce the U.S. tax base, harming U.S. government fiscal outcomes. 

Bill C-59, a government-proposed bill currently in final stages of review by Canada’s Parliament,  directly targets activities in which U.S. businesses have a leading position and drive a large share of potentially ICT-enabled U.S. services exports to Canada. By design, the bill largely excludes analogous activities of competing Canadian businesses. If the United States fails to prevent enactment of this measure, or respond appropriately, not only will significant harms ensue, but a precedent will be set that increases the risk of global contagion for DSTs targeting U.S. digital exporters, significantly increasing the costs to U.S. businesses, workers, exports, and the U.S. tax base. 

The Computer & Communications Industry Association has advocated for tech policy that advances competition, innovation, and consumer welfare for over 50 years.

The following can be attributed to CCIA Chief Economist & Research Center Director Trevor Wagener:

“Canada’s proposed digital services tax is designed to disproportionately target U.S. businesses, while sparing many similar services supplied by Canadian firms. If enacted, the digital service tax would cost U.S. employers between $0.9 billion and $2.3 billion annually, lead to job losses for 1,207 to 3,140 Americans, reduce U.S. exports to Canada, and shrink the U.S. tax base. The Canadian proposed digital services tax is a classic example of a foreign government proposing to discriminate against U.S. employers and exports. If the U.S. Trade Representative fails to fight for U.S. interests in a market with one of our closest trading partners, subject to some of the strongest trade rules to which the United States is party, it will set a precedent that increases the risk of global contagion as other governments see that U.S. export businesses can be discriminated against without consequence.”