Friday, May 27, 2016

BAMBOOZLED: Canada suckered by Facebook and Google’s tax shell game

When Postmedia CEO Paul Godfrey went cap in hand to Ottawa, seeking tax relief and government incentives to save his company, few observers could contain their mirth. Yet nobody connected the dots to the fresh Panama Papers revelations, the massive global tax evasion story that broke just three days earlier.

Canadian journalists, it seems, have not yet solved the murder of their own profession.

Let’s start with the federal government’s own ad spend on daily newspapers. In the seven years since 2008/09, it’s plummeted from 18 per cent of the government’s advertising budget to less than one per cent today.

In a pattern repeated across the advertising sector, Canadian print media hemorrhaged millions of dollars to the government's online advertising, which now swallows some $14 million (or 27 per cent) of the total spend. The bleeding hasn’t stopped, as mobile advertising continues to overtake print media at a spectacular pace. Online advertising is now dominated by Facebook and Google.

That puts costly investigative journalism on life-support, and these two companies are pulling the plug.

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?  (more...)


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