The federal government has revealed plans to remove the financial contribution requirement for online streamers, replacing it with government funding, according to a court document filed by the attorney general’s office. The move aims to eliminate the base contribution obligation on streaming services and substitute it with government funding, as stated in the document dated July 17.

However, the Canadian Association of Broadcasters has expressed skepticism, noting a discrepancy between the government’s communication and their understanding of the situation. Kevin Desjardins, the association’s president, emphasized caution in drawing definitive conclusions based on the administrative communication with the court.

Culture Minister Marc Miller’s office declined to provide further clarity on the government’s position. They refrained from confirming whether the contribution requirement would be permanently or temporarily eliminated, stating they are developing a new policy direction with no additional details to share at present.

In early June, the government announced its intention to issue a new policy directive to the CRTC after the regulator increased contributions for large streaming services from five percent to fifteen percent of Canadian revenue. The government pledged to provide the industry with $600 million in annual funding instead.

Following the passage of the Online Streaming Act by the Liberal government in 2023, the contributions, often dubbed the “Netflix tax,” were introduced. The government is set to publish the new policy directive to the CRTC in the upcoming weeks, as outlined in the July 17 court document submitted in a Federal Court of Appeal challenge by streamers against the CRTC’s rules.

Despite the change in direction prompted by the U.S. flagging the Online Streaming Act as a trade concern, the United States Trade Representative expressed reservations about Canada receiving credit for the move. The Canada-U.S. Trade Minister is currently in Washington following threats of new tariffs by U.S. President Donald Trump on various Canadian goods.

Prime Minister Mark Carney emphasized that the decision to alter streamer contributions was made two months ago to address affordability concerns. Reynolds Mastin of the Canadian Media Producers Association underscored the importance of foreign streamers investing a portion of their revenue from Canadian audiences back into Canadian content.

Desjardins stressed the government’s long-term intention for streamers in Canada to contribute to the system, believing that complete elimination of contributions from foreign streamers while maintaining them for Canadian entities is implausible. Hélène Messier of the Coalition for the Diversity of Cultural Expressions emphasized the necessity for permanent funding to support the audiovisual and music sectors adequately.

NDP MP Heather McPherson criticized the Liberals for canceling fees for U.S. companies, raising concerns about Canadian media’s future. Conservative culture critic Rachael Thomas opposed the CRTC’s contribution rules, accusing the Liberals of favoring American streamers at the expense of Canadian taxpayers.