Friday, May 27, 2016

National Observer - How Canadian Journalists Have Failed to Solve the Murder of Their Own Profession

Vancouver's alternative media outlet, the National Observer, says that Canada needs to go after Facebook and Google for millions of dollars in unpaid taxes.

Canada's newspapers are bleeding money. The problem is a slump in advertising revenue.  When Harper came to power the feds were spending 18% of their advertising budget on the papers. Today it's just 1%.

While the print media bleeds out, 27% of the government's ad budget is now spent online. The kings of online advertising are - you guessed it - Google and Facebook.

Yet despite their substantial sales and marketing operations in Canada, both companies process all transactions in US dollars directly to their US headquarters.

Neither charges GST.

So here are the Panama Papers questions Canadians should be asking:

Do Google and Facebook receive federal government ad revenue, and if so, are they taxed on that income?

Do they pay any tax here on their Canadian earnings?

Last year the Guardian reported that Facebook’s total 2014 UK tax remittance was less than $7000, which happens to be less than the tax bill of the average British wage-earner. Using its network of corporate entities in Ireland and Cayman, Facebook had reportedly collected more than $1 billion in UK earnings tax-free out of the country, according to the Daily Mail.
Facebook pays $7,000 tax to UK, hands out $534 million in employee bonuses

That same year, according to Reuters, Google sheltered some $15 billion (CAD) in Bermuda. Its corporate tax rate has been reported as low as 2.4 per cent. And it's not paid to the countries that generate the income.

The Guardian reported in March that the European Commission is set to table legislation forcing Google, Facebook, Apple and other large multinationals to publicly disclose their profit and tax arrangements with each of the EU governments where they operate.

When overwhelming public outcry drove tax reforms in the UK, Google wascompelled to pay $240 million in back taxes. This deal still drew harsh criticism. Meantime, Facebook has similarly been forced to invoice most sales through Facebook UK rather than the Irish affiliate.

Although that arrangement was expected to yield hundreds of millions in tax to UK coffers going forward, Facebook immediately offset its UK tax liability by declaring an award of $534 million (CAD) in bonuses to its UK employees over the next three years.

When asked to provide details about its tax planning in Canada and abroad, Facebook told National Observer in a statement: “We have always, and will continue, to meet our tax obligations everywhere we operate.”

France’s Tuesday gambit is a signal that Europe has had it with the shell games.

Canada should join them.

Instead of asking the federal government to provide his own company with tax incentives and subsidies, Paul Godfrey should ask them to level the playing field and tax Facebook and Google.


Owen Gray said...

The way to help Canadian media survive, Mound, is to level the advertising field in this country.

Toby said...

It's interesting that requirement to pay taxes where business is done is not part of these international trade deals. If the big countries would close ranks on tax evasion they could turn the world around.