Thank goodness, Mark Zuckerberg has been marked safe in Canada. We were worried.
Canadian-based media companies — like The Globe and Mail, Macleans, Toronto Star and others — that sell on-line advertising put HST on their sales price and pay tax on their profits.
But not Zuckerberg’s Facebook, which Liberal Prime Minister Justin Trudeau has marked safe from paying Canadians taxes.
Commons committee recommended equal tax treatment
In spring 2018, the House of Commons Committee on International Trade looked into the uneven playing field created by the tax-free status of Facebook, Google and other foreign digital giants.
After testimony and debate, the committee recommended Zuckerberg’s Facebook and other foreign digital platforms pay taxes on sales and profits generated in Canada, like domestic companies.
Trudeau: not taxing Facebook “a promise that we made”
But Trudeau has ignored the recommendation because exempting foreign digital giants from Canadian taxes is “a promise that we made.” And we know how Trudeau feels about promises.
Then again, he did try pretty hard to deliver for SNC-Lavalin.
But thanks to Justin Trudeau, Facebook and the other digital giants — some of the richest companies in the world, run by the richest men in the world — are tucked in their no-tax safe space.
They won’t be told to pay full Canadian taxes for advertising bought in Canada or shown in Canada — and will continue to avoid taxes on the massive profits earned in Canada.
NDP leader Jagmeet Singh has condemned what he calls Trudeau’s “secret deal” with digital giants that has created a “rigged tax system that benefits the ultra-rich” by allowing foreign digital giants avoid the taxes Canadian businesses must pay.
Trudeau gives foreign on-line advertisers big tax subsidy
A report by the Canadian Centre for Policy Alternatives found that by 2016 Facebook and Google together were already soaking up 64 per cent of Canadian internet advertising dollars, about $2.4 billion in sales.
Just from waiving sales tax on Facebook and Google advertising, Trudeau is giving the two foreign on-line advertisers a tax subsidy of around $200 million a year.
But everything’s fine — because to offset the unfair advantage given by Trudeau’s tax break for foreign on-line giants, he’s handing out $600 million per year to their Canadian victims through a media bail-out package.
Trudeau did get a fig leaf talking point in August 2018, when Facebook offered to collect and remit Canadian sales tax for advertising purchased at Canadian-based brick-and-mortar Facebook offices.
No word on how minuscule that slice of Facebook’s ad sales would be, where these offices are, or why anyone would travel to a Facebook office to buy a more expensive ad than what can be bought on line.
Facebook’s top Canadian lobbyist won’t register to lobby
The Commons committee hearings also heard testimony from Kevin Chan, Facebook’s head of public policy and a former Liberal Party operative, who despite meeting with Ministers has not registered as a lobbyist.
Registered lobbyists report “events” — meetings with office holders — which are posted in the public registry. Being outside the registry, Facebook’s Chan can operate in the dark.
Under questioning from NDP MP Charlie Angus, Chan also testified that when Finance Minister Bill Morneau needed help understanding how to run a Facebook Live session, he personally came to Morneau’s office to train him.
Angus struck an incredulous tone.
“My light bulb breaks, I don’t call the head of General Electric to come and fix it. And yet, you show up to help him [Morneau] figure out how to get more likes,” said Angus. “Isn’t that a waste of your time?”
Maybe not. Any time spent with the Finance Minister who maintains your tax exempt status is probably time well spent.
Trump backs Zuckerberg’s tax-free status with tariff threats
Unlike Trudeau, leaders in some countries are moving to stop US-based digital platforms from holding an unfair tax advantage over domestic advertisers. And a show-down could be coming.
This spring, France’s government passed a law requiring on-line advertising companies like Facebook and Google to pay taxes. Other European countries are also said to be exploring new laws to equal the playing field between advertisers.
In response, US President Donald Trump has threatened to deployed the Commerce Department to support Facebook and Google. Trump has threatened to charge tariffs on US imports from France if his digital giant allies are required to pay taxes.
Facebook and Google will be making their case to Congress on Monday — trying to find the right words to explain why the US government should make the American people pay more taxes on French goods so the richest companies in the world can be tax-exempt.
Without doubt, the executives at Facebook and Google are thrilled to have Trudeau and Trump mark them safe from taxes. And being defenders of the richest companies and people in the world might have benefits — bigger benefits than free training on how to broadcast Facebook Live.