Legally Speaking with Michael Mulligan
Legally Speaking with Michael Mulligan
BC Distracted Driving Law vs UBER & Canada's Digital Services Tax
Imagine being penalized for a simple screen touch while trying to make a living. Michael Mulligan of Mulligan Defence Lawyers joins us to unravel the outdated distracted driving laws that put gig economy drivers in a bind. Our conversation sheds light on how these regulations, which only permit screen interactions for phone calls, fail to consider today's work environment for gig workers like Uber Eats drivers. We highlight a noteworthy case where a driver was convicted for accepting a delivery, underscoring the urgent need for legislative reform. You'll also hear about some amusing quirks in the law, like the allowances for CB radio microphones, which highlight the disconnect between current laws and modern work practices.
Switching focus to international trade, we explore the strategic dimensions of Canada's Digital Services Tax Act. This 3% levy on Canadian revenues of major US tech firms, such as Facebook and Amazon, is not just a tax—it's a diplomatic tool. We examine how this legislation fits into the larger geopolitical puzzle, especially in light of past US tariff threats. Conversations veer into the fascinating implications of raising the tax rate, arguing that these companies could still find profitability despite a higher levy. Moreover, we look at how other nations might follow suit, using similar measures to navigate trade tensions with the United States.
Follow this link for a transcript of the show and links to the cases discussed.
It's Legally Speaking with Michael Mulligan from Mulligan Defence Lawyers. Morning Michael, how are we doing?
Michael Mulligan:Hey, good morning. I'm doing great. Always good to be here.
Adam Stirling:Some really interesting items on the agenda. I know this is one I've always thought about and I'm glad that we get to have the conversation today. It's the gig economy and Uber Eats driver convicted for touching his screen to accept a delivery. How did distracted driving rules work around this practice?
Michael Mulligan:Well, the problem is that the legislation is just out of date. It doesn't accord with modern reality and what people might be touching their phone for the background of this particular case and it's a appeal decision from traffic court and the background is that a police officer said that he saw a man touching his screen and the officer said twice. Although the man at trial in traffic court testified that he'd only touched the screen once and the judge believed him, it preferred his evidence to the evidence of the police officer and the JP in traffic court justice of the peace or judicial justice acquitted the man on the basis that he'd only touched the screen once. Now, after he did that, the police officer who was there there's no Crown counsel in traffic courts they say well, hold on, hold on, you haven't heard my submissions, you can only touch the screen to answer a phone call and the JP said well, too bad, he's acquitted. The Crown appealed that and the judge the Supreme Court judge, who hears heard the appeal found that the police officer was right and the police officer is right.
Michael Mulligan:The problem is that the legislation just doesn't contemplate things like delivery apps. Legislation just doesn't contemplate things like delivery apps and the way the legislation works is that it prohibits people from using, or holding, in a position that it could be used, an electronic device. It does it in very broad language and then provides for the regulations to be made, the regulations to be made and regulations are like rules made by cabinet, basically the government, that sort of provide more detail for how legislation is to work and there are some exceptions set out in those regulations, and the exceptions include what amounts to allowing you to? The exceptions include what amounts to allowing you to, as long as various other requirements are met, like the phone has to be installed in accordance with the regulations, like firmly affixed to something, so it's not like falling on the ground and you're not, you know, rummaging under your seat for your phone or wearing securely on somebody's body. It then allows people, as long as they have their full license and it doesn't apply to people with their N or L to touch the screen once to like answer or to initiate the call, or to answer the call by voice. You could say like answer phone or something, and it picks up. The trouble is that's the only reason you can touch the screen once. The one touch rule only applies to phone calls, nothing else, and so that's the reason why this legislation is just out of date with modern reality.
Michael Mulligan:What it means is that every single Uber driver is committing an offense when they touch the screen to accept a delivery. Yeah, and that's how it works. And the judge of this case said that is how it works. There was evidence from this driver yeah, the thing would pop up saying, hey, will you accept this delivery from McDonald's or wherever? Right, yeah, here's where it's coming from. And the driver has to tick, touch yes. If they don't touch yes within five seconds, it goes on to the next possible Uber delivery driver or Uber driver.
Michael Mulligan:And so, effectively, the way the regulations are currently written makes it impossible for somebody who's a Uber driver or likely, in some cases, taxi drivers to do a job without constantly committing an offense under the Motor Vehicle Act. And the judge on the appeal pointed out that the driver found it to be very credible that he was trying to do his job as safely as he could, found that the legislation simply doesn't permit one touch for any purpose other than a phone call answering, and said, quite correctly this is the judge, I am required to uphold the laws as written, and so and that's true, right. It's not a judge's job to fix legislation which is out of date or causes people to be doing you know, to be convicted of things, and I should say this really matters, because if you wind up with two of these convictions, if you're caught touching your phone twice, which may well happen if you're an Uber delivery driver driving around all the time, your driving license is prohibited You're going to be prohibited from driving and therefore unemployed. And we've seen in BC the NDP government saying, oh yes, we're very concerned about delivery drivers and, before the election, adding effectively a high minimum wage for them. They're now paid as mandatory something in excess of $20 an hour doing that work, and so they profess to have concern about people in that gig economy. But by leaving this legislation the way it is, it means that they simply can't perform their job without violating the Motor Vehicle Act, and hopefully somebody there is listening to this.
Michael Mulligan:It wouldn't take much to fix. It would be an amendment to a regulation. We don't even need to call the legislature back into session, which they seem not to want to do. This could simply be done by a change to the regulation and the judge who heard this appeal was very clear that this was unfair. The judge just can't fix it right. That's not the judge who heard this appeal was very clear that this was unfair. The judge just can't fix it right. That's not the judge's job, I should say. There are some other amusing exceptions that are in there. I'll give you some idea of the age of this thing. Like there's an exception in here for using hand microphones, which is like a CB microphone, because it's got to be a microphone which can only transmit or receive at one time.
Michael Mulligan:So if you want to be holding your CD mic talking to your good buddy in the other truck, there's an exception for that. Hand microphones Also, they've worked in exceptions in the legislation itself. They exempt things like police and fire personnel. Police are constantly typing on their computer in their car. They have a full laptop set up, mounted in their car, which you know they need Dispatches come up on that. They're typing things. They're typing in license plate numbers, they're searching people's names. They're typing, literally typing as they're driving down the road and they realize well that you know we've exempted that. They realize I guess after the legislation passed other people should be exempted.
Michael Mulligan:They exempted various other sort of similar people, sheriffs and so on that might not have been captured there. But this whole thing just cries out for some modernization and at the very least, if you're allowing somebody to touch the screen once which certainly seems less distracting than holding a CB microphone or typing away with one hand as you're driving your police car down the road or something it certainly seems reasonable to expand the permission to touch the screen once of a securely mounted phone to accept your delivery order and we shouldn't be putting these people in jeopardy of delivery drivers, of being convicted and having their driver's license prohibited and becoming unemployed because legislation is 20 years out of date. So hopefully that's listened to. It's a very clear message from the judge and this is a quick fix. It should be fixed because the current state of affairs is just completely unfair.
Adam Stirling:I'm just thinking it means the entire business model is probably unviable. On the text of the law, because you mentioned, if a driver fails to accept that offer of a delivery within five seconds or something similar goes to another driver, I suppose the legal response would be that when the driver sees that offer being made that they should pull over and, I guess, stop the car to accept the order. But that would probably take more than five seconds to do safely so they would lose, so that would go to the next driver who would then try to pull over and then lose it while trying to pull over and it would go to the next driver who would lose it while trying to pull over. So if we had lawful operation of a motor vehicle, this entire business model ceases to function.
Michael Mulligan:Yeah, it just. It just doesn't accord with modern reality. The legislation is out of date. You know the good reason we don't want people typing away on their phone, keep their eyes on the road, and so on, right. But the idea of a securely mounted phone and that's also a requirement, by the way If you have your phone, just like sitting on the seat next to you or something, you cannot touch it even once to answer the phone, right, that's important to know. So it's got to be securely mounted to your body, like I guess you could have it strapped onto your wrist or arm or something, or securely mounted to the car, and the idea there is you don't want the thing flying around the cabin or something struggling to find the thing. So that's understandable, right.
Michael Mulligan:But whether you're touching it once to answer the phone or once to accept your delivery, we just shouldn't have a state of affairs where one of those people is just required to commit an offense, to do their job. I mean, you may have people that lie about that. I guess that's going to be a prosecutorial problem. Why did you touch it once I was answering the phone? Well, good luck proving it. This fellow the judge said, by the way was extremely credible. The reason why there was clear evidence about why he touched it once was that he testified and explained that he touched it to accept the thing and explained that he only had five seconds.
Michael Mulligan:I mean, I guess that's going to create another danger. If you want to have Uber drivers, taxi drivers and so on slamming on their brakes Exactly Over to the side of the road, that's not great. You know and you've accepted that it's safe to touch the phone once to answer the phone call. Then you're talking this, you're just clicking it, touching it once. Yeah, so it'd be very easy. Just delete the requirement that the single touch before the purpose of a phone call still require it to be mounted.
Michael Mulligan:It doesn't decrease safety in any way. Right, we're allowing that phrase. You can do that exact same action in exactly the same way for a different purpose lawfully, and so this just needs to be fixed. It doesn't take much and that's going to affect thousands of people every day and it's just really unfair that it stayed the way it does. There's been a clear message sent from the judiciary and hopefully the government does its duty and gets this up to date so people aren't losing their employment for trying to touch the screen once to accept their delivery, which they could lawfully do if they're making a phone call. So it seems like an easy fix.
Adam Stirling:All right, we'll take our first break here. Michael Mulligan with Mulligan Defense Lawyers. No-transcript. All right, we are back on the air here at CFAX 1070 with Michael Mulligan from Mulligan Defense Lawyers as we continue our agenda for today. Up next, michael. It says Digital Services Tax and Trump Canada's Digital Services Tax Act. What's the story?
Michael Mulligan:So this is an interesting thing, both from the context of the current threats by Donald Trump to impose tariffs on exports to the United States from Canada, and it reveals what another potential response by Canada would be to that which, like what we talked about previously the reduction in US patent and intellectual property protection would have the advantage of raising money for Canada while imposing disproportionate pain on US companies. I should say, on the issue of patent protection, there was a good editorial in the Globe and Mail yesterday by Richard Gold, who's a professor from McGill, advocating for that as a response and explaining the provisions of the Canada Patent Act that would allow the Canadian government to respond to US tariffs and that way saving potentially huge sums of money for Canada while punishing the United States to the tune of billions of dollars. This is another interesting approach, and I should say this Canadian piece of legislation the Digital Services Tax Act piece of legislation, the Digital Services Tax Act was one of the things that was referenced in the various documents. You might have seen Trump signing various executive orders on his first day. He's so concerned about it. He was in that ordering the Treasury and Commerce Departments to examine extraterritorial taxes imposed on US companies, which would be this from his perspective. I must say that's an interesting thing, given as well that Trump is proposing setting up a Department of External Revenue to try to collect money from other countries to pay US bills. But with that aside, here's what that is.
Michael Mulligan:So this was a new piece of legislation passed by Canada in June of 2024, and it came into effect by order and counsel June 20, 2024. And what it does is it imposes a 3% tax on digital service revenue exceeding $20 million per year earned in Canada. The idea is this, and I should say it only applies to very large companies, like companies that have a global revenue from all sources in excess of 750 million euro. Basically, this is a tax on X, facebook, amazon and other large US companies. That's really what it amounts to, and the idea there is that it would be a 3% tax on revenue they're earning from activity in Canada. So, for example, things like many of those services Facebook and others they may not even charge a fee, but they would have things like online advertising social media platform out of online advertising, they make money by selling your personal information for advertising, right? Really, as they say, you know you're not the customer, you are the product when you're using some of those things, right, and also online marketplaces that would be like eBay, amazon, all of those things, and it requires those large companies that are making money from Canada to register and then pay this 3% tax on what they're making from those sources of revenue in Canada, causing the US to have a bit of a conniption.
Michael Mulligan:Biden was too, because at the moment, that's not taxed by Canada. If you have, you know, facebook or X or any of those things making money on advertising in Canada, the US gets to collect all of the tax revenue and Canada gets none, which they don't like. And so, first of all, it sounds like this may be one of the really serious points of contention that may be leading to Trump's you know tyrants about how they're subsidizing Canada. But the flip side of that is that if Trump does impose tariffs, like the removal of patent protection and intellectual property protection for US companies, this will be another opportunity for Canada to extract disproportionate pain on the United States without adding costs to Canadians, which is what a reciprocal tariff does. The tariff is just taxing your own people for things they're buying elsewhere, right, I mean, the sellers don't like that, but you're just taxing your own people, and we're a small country in relation to the US, so taxing our own people on US stuff probably is not going to be too effective this kind of thing would be and so this is currently at a rate of 3%, and, bearing in mind that the marginal cost of providing an online service like Facebook or X or eBay or various things, for the next marginal customer, the cost of providing that service is next to zero. Right, that's one of the reasons why that and software is such a good business. Once you make something, you can just sell as many copies of it or have as many users as you want. Each additional user costs you next to nothing, right? Yeah, they're profitable. Yeah, so it's currently 3% is the rate of this tax.
Michael Mulligan:It seems to me you could raise this to, let's say, 75% of the profit made by any of those companies in Canada, and they'll still leave them 25%. And when your cost of producing the service is zero effectively, right, the marginal cost of another Facebook user is almost zero. A rational company would continue to offer the services. 25% is better than 0%, which would be their alternative, and so this is another opportunity for Canada to respond if there isn't some agreement reached.
Michael Mulligan:In addition to no patent protection and generic drugs cheaply and all of that, this piece of legislation the rate of tax on what amounts to these large US companies could go from 3%, to pick your number, whatever the highest number is. It wouldn't cause the company to think rationally. I'm going to stop providing services in Canada, to the extent you care about that, right. If you think it's important that we have Facebook access here, you probably wouldn't want to put it at 100% because the company would rationally stop providing service. Why would they bother? Right, but you could raise this to extract virtually all of the profits from US companies and you can just imagine what the response would be amongst the cadre of people. If you watch the US inauguration these sort of tech billionaires lined up at the inauguration you can just imagine the response from you know, mark Zuckerberg or somebody right. If the effective rate of tax for all money earned in Canada is going to be 75% and maybe other companies would like it or other countries would like it too, maybe if you're the UK or you're the EU and you want to respond to US tariff threats without costing your people more, maybe you just extract virtually all of the profit made by those large US companies, and it's just a great example of how a smaller country can use this sort of smart leveraged approach and, rather than punishing yourself to get at your opponent, you can do things which are very advantageous to you lots of extra tax revenue in Canada, devastating to the other country and companies there, and something which you can just do entirely domestically, and there it is right. You just imagine what the response would be.
Michael Mulligan:Much like the immediate and swift response of every company in the United States that has any intellectual property, which is, frankly, much of what the US exports. You know, one of the US concerns is that their manufacturing is modest. Many things which are US products or US companies are not in fact manufactured in the US at all, and what the US is selling amounts to intellectual property, copyrights and permission to do something, copies of software and so on, and so the US is very vulnerable to this and the value of US companies. Much of their exports Apple computers is not making anything in the United States. All of the physical stuff is coming from elsewhere. Really, what they're selling is their copyright Nike shoes Nike doesn't have a single factory. All they have is a design and the ability to extract money from that sort of intellectual property or brand and if you just take that away, they're not worth anything. I mean, they're worth something in terms of what they can sell in the United States, but if anyone can just put a swoosh on their shoes and anyone can, you know, brand their product wherever you want.
Michael Mulligan:Many US companies have really very little value, and so it just is a really great opportunity you want. Many US companies have really very little value, and so it just is a really great opportunity. This as well to keep in mind and hopefully our response, if it comes to that, isn't just a knee-jerk. Well, I'm going to dollar for dollar, tax our people to just show those Americans right, how expensive we can make orange juice or breakfast cereal, right? No doubt the orange juice or breakfast cereal people don't like it, but hardly bring them to their knees. This sort of thing could bring them to their knees. So that's the digital services tax. It's front and center and if nothing can be negotiated, hopefully we consider this as well as one of the responses to punish Trump and the US for what they have proposed.
Adam Stirling:Michael Balligan, with Balligan Defense Lawyers, legally speaking during the second half of our second hour every Thursday. Michael out of time? A pleasure as always. Thank you so much. Have a great day. All right, you too.