80% of the Canadian population lives within 200km of the US border, putting them in range of American TV and radio signals. Because they carried big-budget programming from the big US networks, Canadian advertisers often chose to place their ads with these American stations who would broadcast back into Canada, at the direct expense of Canadian media.
Recognizing that this practice would wipe out Canadian media, government imposed tax penalties for businesses who chose to reach their Canadian audience by advertising in US media. This applied to all media available at the time, including TV, radio, newspapers, and magazines.
But because of a technicality in the Income Tax Act, these penalties don’t apply to foreign digital ads. Buy an ad from the Canadian edition of the New York Times, and you pay the tax penalty. Buy an ad from nytimes.com, and there is no penalty. The result is $1.6 billion of corporate income tax not collected
Google and Facebook control almost 80% of the digital ad market, so they are by far the biggest beneficiaries of this loophole. The biggest losers are Canadian media, who are going bankrupt, and Canadian citizens, who depend on professional journalism to keep democracy alive.