Digital advertising tax labelled ‘a dog’s dinner’

The government’s proposal to tax digital platforms has been described as a ‘dogs dinner’ leaving much of the nation’s media and advertising industry’s leaders baffled.

Most of those contacted by Mumbrella to comment on the plan had no idea how a tax would be structured or enforced, with most saying they couldn’t comment as the idea seems to have come from nowhere.

Confusion reigns over Treasurer Scott Morrison’s digital tax plan

News of the plan to tax digital advertising broke via briefings by the Government to News Corp and Fairfax Media.

The reported proposal seems to be based on a passage in the budget handed down earlier this month which got little attention on the day:

“The Government is committed to ensuring that digital businesses pay their fair share of tax in Australia and is actively engaging with the OECD in exploring options for taxing the digital economy. The Government will shortly be consulting on recent international developments and how digital businesses are taxed in Australia.”

In his budget speech, Treasurer Scott Morrison also said:

“The next big challenge is to ensure big multinational digital and tech companies pay their fair share of tax.

“Over the past year I have been working with counterparts at the G20 to bring the digital economy into the global tax net. In a few weeks’ time I will release a discussion paper that will explore options for taxing digital business in Australia.”

Mumbrella understands the Centre Alliance senators at the heart of the story had not agreed to support the measures as claimed by reports in News and Fairfax this morning but had instead expressed their interest in the idea when it was put to them by the Treasurer’s staff.

Walton: Dog’s dinner

One of the few industry figures prepared to go on the record over the proposal was Nunn Media managing director Chris Walton who told Mumbrella: “One key fact missing is – what is the point of the tax?

“If it is to have the global tax avoiders pay more in tax than they currently are due to them exploiting loopholes, then it would seem more logical to close those loopholes than introduce a new tax.

“If it is to help other media compete by making the likes of Google and Facebook more expensive then the tax is playing a market manipulation role. This ignores market forces, would seem to go against the broad conservative stance of lower taxes, and is likely to be a cost passed on to the end customer. Ultimately is a 3% price rise going to turn the tide of budgets going to FB and Google? No.

“And it could be a right dogs dinner to try and implement.”

Emma LoRusso, CEO of Sydney based influencer platform Digivizer also thought the idea had merit but would need to be properly designed, saying: “My question in all this would be how is the government setting a fair and competitive economy for Australian businesses to start, grow, flourish, build and sustain.

“We need to create a fair and competitive environment for all businesses to do business here in Australia. Thus those entities doing business here need to operate within and pay the same tax and contributions that our own Australian businesses are required to.

“In terms of the old adage that more tax means more costs to Australian businesses, the devil would be in the detail and intent. If it is a true cost of doing business, then presumably it needs to be considered something Australian businesses could claim back. The point would be to ensure that overseas companies are not taking advantage of a tax loophole that only they can take advantage of”

The only industry body that was prepared to publicly make a statement was the AANA with chief executive officer John Broome telling Mumbrella: “The AANA will review carefully any discussion paper or proposal about a tax on digital advertising revenue that may emerge and provide our view at that stage.”

It is expected the government will release an issues paper in coming weeks to discuss the proposal.

The Media Federation of Australia, which represents media agencies, the Internet Advertising Bureau which represents the digital industry, and the Communications Councuil, which represents creative agencies all declined to comment on the record.


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