A tax on social media companies is the cost-of-living solution we need
The Federal Government is considering a new tax on overseas media giants as a sneaky new way to force Meta and Google to continue funding Australian journalism.
A Labor-led ‘Joint Select Committee on Social Media and Australian Society’ this week acknowledged that the News Media Bargaining Code, introduced by the Coalition in 2021, has “fundamental problems” – namely, it didn’t work – and instead recommended a new levy on large digital platform, which would then be distributed to the media companies.
The News Media Bargaining Code ostensibly gives the government powers to ‘designate’ tech companies and force them to pay for news content shared on their platforms, should they choose not to strike such deals themselves.
The fatal flaw in this plan is that Australian media relies upon the distribution methods of social media far more than the social platforms rely upon news – something adequately displayed when Meta opted not to renew its deals in March, and simply threatened to pull all news from Facebook and Instagram should the government react unfavourably.
The government’s report admits as much.
“The code presumes that social media platforms want to carry news, or that certain digital platforms consistently need news content to provide a service,” it reads.
“Without designation, the logical step is that the nexus between the support for public interest journalism and the commercial arrangements with digital platforms under the code is broken and should be replaced with alternative revenue mechanisms, such as a levy system, on the broader operations of the digital platforms.”
Rather than scrap the code, the report suggests it be used “as a vehicle to disseminate funds from a levy system to the news media publishers, with a revised registration criteria that does not present an unreasonable barrier to registration for small, independent or digital only publishers”.
Greens communications spokeswoman Sarah Hanson-Young floated the idea of a tech tax in August, in the midst of the debate over gambling advertising reform.
“Labor should get real with a tech tax on the global giants like Meta, Google and TikTok to make them pay for the journalism and the content they monetise,” she said at the time.
“If we want to fund journalism, we need a tech tax, not more problem gambling and predatory ads during the footy.”
While the gambling debate has fallen off the front pages, the tech tax has been floated as an alternative to the News Bargaining Code, given Meta has clearly decided it would rather not have news on Facebook at all in Australia then pay tens of millions of dollars to big news outlets.
Meta has been forceful in this regard, rightly resentful of being shaken down by the Australian government for $70 million a year, especially when it claims links to news stories make up “less than 3% percent of the content people see in their Facebook Feed”.
“The truth is that interest in news is declining on our platforms and that our audiences are engaging with different types of content,” Meta Australia claimed in March, weeks after it discontinued payments.
“News is not the reason people use Facebook and Instagram”, it said, explaining “when there is less or no news on our platforms, people continue to use our services”.
“However,” it continues, “much of the recent public debate suggests that Facebook needs or unfairly benefits from news content, including financially. This isn’t the case. Meta is a commercial business and it is in our interest to continue to create products and services that help us grow and be successful.
“The reality is that accessing news is simply not the reason most people use our services.”
Meta also had an active case study – the entire country of Canada – which passed the Online News Act in June 2023, likewise attempting to force social media giants to pay for the privilege of disseminating local news content. Meta simply blocked news content from its platforms in August, and active users on Facebook in Canada continued to increase.
A study of the first year of Facebook’s news ban found that Canadian news outlets saw a total reduction of 11 million views each day, once the ban was imposed.
Aengus Bridgman, director of the Media Ecosystem Observatory and co-author of the study, found: “Canadian news organisations lost an enormous amount of their online viewership. They’ve been heavily relying on the distribution channels of Google and part Meta to get their work out there.”
This was the crux of Meta Australia’s argument: It provides enormous financial value to news organisations, who choose to share their content on Facebook and Instagram and take advantage of this free distribution.
“Forcing technology companies into commercial relationships will not solve the long-term challenges facing public interest journalism or encourage the news industry to develop sustainable business models,” Meta Australia reasoned.
However, taxing tech companies who choose to operate in this country and funnelling those funds to journalists – and not just the major outlets that received outsized benefits of the 2021 deals struck with Meta and Google, but, as the report recommends to “small, independent and digital-only publishers” and those in “rural, regional and remote areas” – now, this is a fantastic idea.
Unlike the Media Bargaining Code, which was doomed from the start due to the mob-like strong-arming involved, a tax is simple, and has international precedents that don’t actively hurt its cause, unlike the Canadian Facebook debacle.
You know who has the tech giants sorted? Kenya. It slugs Amazon, Netflix, Google and Meta a 6% ‘digital tax’ to operate in its country.
France imposed a 3% tax on revenue from digital services in the country back in 2019, while the United Kingdom, Italy and Austria did likewise even earlier. Spain, India, Turkey and Portugal followed suit. International diplomacy didn’t collapse. As far as I’m aware, Facebook still operates at a roaring profit in the UK.
But we can go further than that.
In the UK, between 1951 and 1973, top earners were taxed a whopping 90% of their income. During financial year 1965/66, this was raised so anyone earning above £15,000 was taxed at a rate of 95%!
The situation was so dire that George Harrison wrote a Beatles song – Taxman – about being reamed for millions from the Wilson Government, singing: “Let me tell you how it will be/ there’s one for you, 19 for me” and “should five percent appear too small/be thankful I don’t take it all.”
Imagine taxing these big tech companies 95% of their earnings in Australia. Of course, to do so, they would first have to report their earnings fairly.
Meta for example, funnels its Australian advertising revenue (plus that of various other subsidiaries around the globe) into Meta Platforms Ireland, which then enjoys the Irish tax rate of 12.5%, rather than our 30% corporate tax rate.
Facebook Australia earned $1.25 billion in 2022 from advertising, but reported just $77 million before tax, paying just $31 million.
Of course, the US will kick against a massive tax. When France implemented its 3% tax, the Trump administration threatened $1.3 billion in retaliatory tariffs on French imports “including handbags and cosmetics”. They didn’t do it, but they threatened it.
The tech companies will also threaten to leave Australia, which – while ever they are earning even a dollar from our country — they will never do, but now’s the perfect time to slip such a tax into law.
American leaders are too distracted with their civil war election and McDonald’s press stunts and podcast appearances to notice an amendment to Australian taxation laws.
C’mon Albo, let’s fix your approval rating. Let’s flood this country with Facebook dollars. Let’s sneak in a 99% overseas tech platform tax just before the US election, fix the cost-of-living crisis, and let Elon and Zuck deal with the shock next tax season. Then, we promise we’ll let you enjoy your new coastal mansion in relative peace. Deal? Deal!
Enjoy your weekend.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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So you want essentially us in the end to bankroll stubborn old iron media refusal to evolve? Fantastic. Let’s just throw our money at propping up mediocrity and clinging to a broken outdated model. Nothing says ‘progress’ like anotheeeeeer tax to keep the dinosaur aka old iron media alive.
This isn’t the flex you think it is.
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Yes Sean, attention-seeking influencers and conspiracy theories is a great replacement for public interest journalism.
You can celebrate with your viral dance videos when we can’t agree on a single fact since everything will be subjective and whatever people disagree on will be considered ‘fake news’.
Not a world I want to be part of.
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