A crucial component of a functioning tax system is that it should establish a level playing field, and should not arbitrarily pick “winners and losers”. I happen to believe that the tax system should rarely be used to drive policy, but that is obviously a minority view. But a tax system that perversely favours some over others for no policy reason at all is clearly flawed.
Our HST system is trapped in 19th century mercantile thinking and is such a flawed system. We levy HST on services provided by Canadians for Canadians, but we do not levy HST on the same services if they are provided by “non-Canadians” for Canadians. It defies belief that Google can direct Canadian search queries to google.ca instead of google.com, while at the same time evading any responsibility to levy HST on its advertising (the real service it sells and thus its core business, not the free service it provides to support its advertising business), while domestic advertisers must charge and remit HST is ridiculous. It is also an instance of massive tax leakage.
Google, Netflix, Amazon … the list goes on. They must be forced to levy HST on the services that they provide to Canadians – otherwise, they gain an enormous (i.e. roughly 13%) advantage over Canadian competitors for no reason, all to the detriment of Canadian companies and Canadian taxpayers.