At The Conversation Massey University lecturer Victoria Plekhanova writes: Google and Facebook pay way less tax in New Zealand than in Australia – and we’re paying the price.
While the internet has created new opportunities for media and audiences alike, those opportunities have come at a price. Traditional media organisations now compete with giant digital platforms, not only for the attention of readers, but also for the advertising revenue that was once their lifeblood.
Adding insult to injury, the digital platforms compete for audiences’ attention partly by distributing the news content that was first created and published by those now-struggling media organisations.
This not only damages the media and public discourse, it is harmful to taxpayers.
Plekhanova says Google paid A$426.5 million in Australian digital service tax in 2018. That’s 66.5 times the amount of tax paid in New Zealand: “Given the New Zealand economy is about a seventh the size of Australia’s, this is an extremely wide disparity”.
There are also rules forcing Google and Facebook to compensate publishers when they piggyback off their original content.
The idea of a digital service tax isn’t that unusual. Other countries have a similar tax.
All of this makes sense. We let the overseas media giants freeload here. Part of their income depends on services that have been provided by taxpayers. Some of that income even comes direct from government agencies which buys advertising on the two social media giants.
It amounts to a net transfer from the New Zealand taxpayer’s pocket to social media investors: some of the richest people in the world.
Tax a global problem
Ideally the OECD would deal with this problem. But that’s been a long time coming and the money continues to flow in one direction only.
Plekhanova comes unstuck when suggesting taxing or charging tech giants will help local media survive. The damage was done ages ago. Survival depends on more than taxing the giants and anyway, up to a point the main local media outlets depend on the tech giants to reach their audience.
So, yes, let’s tax Google and Facebook like countries tax extractive industries. And, at least, stop pour government money into their coffers. But let’s not kid ourselves this is going to fix our media problems.