Federal Heritage Minister Mélanie Joly says Quebec is free to impose its own tax on foreign-owned online streaming services such as Netflix, insisting that Ottawa is listening to "anxiety" within the province over the issue.
Quebec's National Assembly voted this week to require online providers to charge provincial sales tax after the federal government declined to require Netflix to apply the GST.
"It's their own decision in their own jurisdiction and we respect that, of course," Ms. Joly told reporters on Thursday after taking part in a discussion at the Vancouver International Film Festival.
Ms. Joly announced last week Netflix had agreed to invest $500-million in Canadian productions over the next five years, but the deal did not require it to collect taxes from its subscribers here.
Canadian competitors say not requiring Netflix to apply the same taxes that they do puts them at an unfair disadvantage. The streaming giant taxes its services in other countries.
The agreement prompted opposition among Quebec politicians and artists. Quebec Finance Minister Carlos Leitao said the province intends to collect up to $20-million a year from Netflix subscriptions.
Ms. Joly defended the federal government's approach.
"I am convinced that we presented a very forward-thinking plan, something that is very new and that, of course, is dealing with a sector facing a lot of disruption," she said at the Vancouver event.
"Of course, I understand there is anxiety and that there are questions that are unanswered."
Netflix does not release regional subscription numbers, but research firms say 1.2 million to 1.45 million Quebec households subscribe to the service. Quebec's provincial sales tax is 9.975 per cent.
When asked if the government is considering similar agreements with other U.S. streaming services, Ms. Joly said she has had discussions with "Silicon Valley players" but declined to elaborate.
During the event, an audience member asked Ms. Joly whether she could ensure B.C. producers get their fair share of the Netflix money.
"Five-hundred million: Is it all going to go to Montreal or Toronto because the history of the investment in cultural industries in British Columbia has been pathetic over the years?" the audience member said.
Ms. Joly said she gets the same question in Eastern Canada. "They all think everything is shot in Vancouver," she said, referring to the province's multibillion-dollar production sector, which largely serves Hollywood-created and -financed feature films and TV series.
Still, she said the Netflix investment has no guarantees of regional equity because government has no say in that issue.
"It's actually the investor who will decide which story it will invest in. The reality is that there is a global hunt for stories. The best stories will be developed."
David Shepheard, director of the Vancouver Film Commission, said in an interview that Vancouver is well positioned to compete for the funds because Netflix productions such as A Series of Unfortunate Events and the yet-to-be released Altered Carbon, among others, have been shot in the region.
Mr. Shepheard said the Netflix money may have to be spread across Canada, but Vancouver is already a key production centre and should have an edge.
"We've got an advanced step on some of the other production centres because of that business relationship," he said. "When we talk to the executives at Netflix about Vancouver, it's always an easy sell because they have worked here, they know the quality of the crews. They know the types of product that gets made for them here."