This is Definitely a Case Where We Should Tax the Rich

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The Globe and Mail recently reported that Prime Minister Justin Trudeau lambasted big Internet companies for “harming the democratic process” and “generating hefty profits while failing to support traditional news operations in Canada.”

That’s rich. He’s certainly right, but the Canadian government has thus far been utterly useless in defending Canadian media against multinational operations on a policy basis.

Facebook is one of the biggest culprits, although the purveyor of personal data to political campaigns is among the first to collect sales taxes on advertising in Canada (along with Instagram.) So yes, they will finally join the ranks of the taxed, but no, they still won’t pay any business tax on profits despite the fact that the company operates here. And everywhere else.

Meanwhile, Facebook and Google, together, capture something like 64 per cent of all advertising revenues generated in Canada, equalling $2.4 billion. With a B. Until now, none of that was taxed. Ask your local, regional or national newspaper publisher if he or she is signing a whopping cheque to Canada Revenue Agency (CRA) every quarter (although a smaller amount than in the past). Or, don’t bother; you already know the answer.

And why are the big, big, big boys exempt? Because foreign e-commerce firms have no physical presence in our country, and the CRA therefore views them as “not carrying on business” in Canada. There are so many expletives I could apply to this bizarre concept, they’d take up the whole page. But this is a family paper.

Anyway, Quebec has had enough, bless it. The province, as of the beginning of 2019, is requiring Amazon, Facebook, Google and all the rest to charge sales tax on ads and pay up. That money will largely come out of Canadian pockets, just like taxes generated by traditional media, for sure; and it may not level the playing field from an online power perspective. But at least it’s fair.

Trudeau, unfortunately, did not go so far as to promise the imposition of taxes, nor regulation of any other kind in Canada. Instead, he suggested global Internet firms take responsibility for their actions. (I suppose Facebook has started doing so, but its reputation is seriously in the dumpster; methinks it had to do something.)

While I, as an old newshound, appreciated Trudeau’s fairly assertive comments, I also not want to hear him complaining if he isn’t going to do something about it, and the problem is the policy. 

The CRA, to which I also sign cheques for income tax and GST, is perfectly happy to receive my pathetic offerings, even though they’d get a heck of a lot more from Facebook. And they’re all over me, down to the penny. The last time I paid GST, well within the window allowed, they did not process it fast enough and billed me $1.31 for being in arrears. This is not happening to Google or Amazon, nor did it to Facebook.

So the question is, why should you care? Because: 

  1. The Government of Canada via the CRA has created this wonky unlevel playing field in favour of foreign interests, some of which are not serving us (or the Americans: see Trump campaign) well. 
  2. Local and national traditional media outlets (in the main) are not feeding you fake news; on the contrary, they are trying to keep you informed and thereby protect our democracy and 
  3. It is paying lip service to a problem that could bite us on our collective backside. 

But! some might say. Mr. Trudeau’s government has established a $595-million fund (over five years) to support Canadian media, via assistance to non-profit news groups and tax breaks. We’ll have to wait to see how much that helps, but something has to. Our Canadian news outlets are suffering mightily. Many are closing down. Ask the folks in Guelph how they enjoyed losing their Mercury. You can’t get a paper copy of the Globe in the Maritimes. This list of news gaps could get long, very quickly.

Meanwhile, the CRA has put all of them at a policy disadvantage that is patently ridiculous. Google and Amazon and Facebook may have no bricks and mortar presence, but a child could tell you they’re operating in Canada. 

Figure out how to tax them. Make them collect and pay GST. And if I may offer one more suggestion… use those funds to support newspapers. Governments can advertise under certain circumstances, too, depending on various laws and media policies. So do it. Use the Internet giant tax funds to remind people to dress warmly, stop drinking and driving, get out and vote or even pay their taxes; I don’t care. 

You use Facebook and Twitter to communicate with the masses, Mr. Trudeau. Maybe you should try your local newspaper.