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25 February, 2021

The Farcebook Saga

Opinion piece, Cairns Local News Feb 26, 2021

By Peter McCullagh

Opinion piece, Cairns Local News Feb 26, 2021

Should this social media pillow fight between the Australian government and Google and Facebook, be about paying for news, or paying an appropriate measure of tax?

Unfortunately our government believes the real issue here, is that companies like Google and Facebook should be paying for the news shared on their digital platforms.

Google rolled over early and inked a 30 million dollar deal with the big end of media-town, placating immediately the hard talking Prime Minister and his Treasurer.

A smart and financially prudent counter-move from Google. Talks continued with Facebook and we (the government) reached a compromise suitable to Facebook.

Collectively Google and Facebook amassed a total of $7.4 billion in sales in Australia and paid between them $146 million in tax to the Australian Tax Office.

This represents an abysmal 5.7 per cent tax paid by Google and an even smaller 1.2 per cent paid by Facebook.

Should we as a country demand that digital platforms pay for news, or should we demand they pay a fair rate of tax?

Considering the major publishers in Australia all have paywalls where you need to subscribe to read their articles, isn’t this double dipping? If the major publishers are being paid for their news, why is there a paywall? Could it not be argued that their news has already been paid for, since you need to subscribe to read it?.

Ignoring the paywall issue, more importantly why has this government not called Google and Facebook to task and demanded they pay their fair share of tax?

That said, I realise every major company and wealthy individual will structure their accounting processes with the view to minimising tax paid.

Kerry Packer infamously quoted at a 1991 Senate Corporate Tax Inquiry, “I don’t know anybody that doesn’t minimise their tax,”

“I’m not evading tax in any way shape or form. Of course I’m minimising my tax. If anybody in this country doesn’t minimise their tax they want their head read.”

The fact that both Google and Facebook have minimised their tax to the extent they have, is incredible.

Also incredible is the government’s lack of action and willingness to tackle the digital platforms for payment for news carried instead of payment of corporate tax.

If someone in Australia wanted to advertise in the Cairns Local News, we collect GST on the cost of the ad. If someone advertises on Facebook or Google, no GST is paid on the advertising costs, why?

The advertising is placed in Australia, appearing on Australian computer screens, but the country derived no gst revenues, and then to add insult to injury the tax payable by the digital platforms is minimised so Australia receives very little revenues, and all the profits are sent off-shore.

So much for supporting local industry and building the local economy.

Perhaps we should ask our Federal members as to what the strategy is to increase corporate tax revenues from our digital businesses.


Peter McCullagh


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