Tax Policy Branch
Department of Finance Canada
June 17, 2019
To Whom It May Concern: I appreciate this opportunity to offer feedback on the Department of Finance’s draft legislation amending the Excise Tax Act. My brief comments today will focus on the proposal to treat virtual currency as a financial instrument. Given that these proposed changes are likely to simplify the registration, reporting and remittance requirements for suppliers, we should be mindful of the wider socioeconomic and environmental impacts of facilitating the use of cryptocurrency.
The draft legislation leaves unanswered the question of how industry participants, namely crypto-mining, will be treated with respect to GST/HST. For instance, were zero-rating to be applied in lieu of exemptions, would it benefit non-residents disproportionately to resident Canadians, and how can we determine that with any certainty given the anonymity of the platform?
We should ensure that any tax incentives to establish crypto-mining in a Canadian jurisdiction is attended by energy regulations, similar to what Quebec has done this spring. There should be requirements that the company use green energy sources, like Iceland’s Genesis Mining, and that they engage in efficient blockchain systems like “Proof of Stake,” which reduces duplication in effort and resources. All these activities should be further constrained within Canada’s international obligations in respect of climate change. Keeping down the high energy demands of any blockchain industry in Canada is essential if we are serious about reaching the Paris Target. Not to mention, doing so will prevent costs from trickling down to the consumer.
Meetings of the House Standing Committee on Public Safety and National Security regarding cybersecurity in the financial sector make clear that we need solutions to reduce the incidence of fraud and to protect sensitive data. Cryptocurrency may be part of this, bringing with it the additional benefit of integrating people into the market without need of a bank account. More broadly speaking, distributed ledger technologies could also help to prevent vote tampering during elections, facilitate government services like visa applications, and protect information in government registries as B.C. is now doing with land titles. I support moving in this direction as long as we proceed cautiously and with an eye towards protecting people’s privacy.
Thank you in advance for your consideration.
Elizabeth May, O.C.
Member of Parliament
Leader of the Green Party of Canada