By political reporter Tom Crowley for the ABC
The tax, which could also apply to Apple and Microsoft, would be applied to the platforms’ Australian revenue.
Photo: Victor Okhrimets / 123RF
Facebook, Google and TikTok will be forced to fund Australian journalism, even if they do not host it, under a federal government plan to impose a new tax aimed at encouraging the tech platforms to establish funding agreements with news organisations.
The tax, which could also apply to Apple and Microsoft, would be applied to the platforms’ Australian revenue, but can be reduced to zero if they sign agreements similar to those Google and Meta (the owner of Facebook) signed in 2021, including with the ABC.
The expiration of those agreements, and Meta’s threat not to renew them, made the government reconsider how to get platforms to pay without spooking them to pull news off their platforms.
The new tax could be offset on a dollar-for-dollar basis or more by the amount platforms spend on new agreements, making those agreements a cheaper alternative to paying the tax.
On that basis, the government does not expect its tax will raise any revenue, seeing it instead as a “backstop” to bring platforms and media outlets to the table.
If any revenue is raised, that would also be distributed to outlets via a mechanism that has not yet been determined.
Ministers Stephen Jones and Michelle Rowland plan to legislate the change in the new year but backdate it to take effect from 1 January for tax purposes.
“Strong, independent journalism is absolutely critical,” Jones said.
“Digital platforms receive huge financial benefits from Australia, and they have a social and economic responsibility to contribute to Australians’ access to quality journalism.”
Game of chicken
The ministers have opted not to release their plans for the rate of tax or the size of the offset, except to clarify that it will apply to all social and search platforms with Australian revenue of over A$250 million (NZ$276m) and will not be “refundable”.
That means platforms can only reduce the tax to zero and would not be reimbursed beyond that point.
Ambiguity over the rate allows the government to go to the negotiating table with the tech platforms and make a final decision it thinks they will accept. Jones described his strategy as “playing four-dimensional chess”.
Meta has previously threatened to pull all news from its Australian platforms if forced to pay, as it did briefly in 2021. While this proposal will dull that threat by making Meta pay whether it hosts news or not, the government is also conscious of avoiding more drastic actions such as the company withdrawing from Australia entirely.
On Thursday, Meta said it was concerned about “charging one industry to subsidise another”.
“The proposal fails to account for the realities of how our platforms work, specifically that most people don’t come to our platforms for news content and that news publishers voluntarily choose to post content on our platforms because they receive value from doing so,” a spokesperson said in a statement.
The first round of Meta and Google agreements had provided a substantial revenue stream to major commercial publishers and the ABC, which used its money to add 60 journalists to its regional workforce.
But many smaller players had been unable to secure agreements.
The design of this tax would not stipulate which media outlets the platforms should pay – instead, it would work like a standard tax offset where any dollar spent on an agreement with a relevant outlet would be deductible.
While full details have not been settled, this raises the possibility that platforms could choose to sign exclusive deals with one or some outlets.
Rowland has separately flagged plans to announce direct government funding for news media in next week’s mid-year budget update, with no further details as yet.
ABC managing director David Anderson welcomed the government’s announcement as an “innovative measure to continue the funding for public interest journalism provided by the News Media Bargaining Code”.
“Agreements reached under the original News Media Bargaining Code enabled the ABC to significantly increase its regional presence,” he said.
“We look forward to engaging with the government as it consults on the details of the scheme.”
The acting chief executive of Nine, Matt Stanton, also said it was a positive step that would help “protect the sustainability of Australian news media”.
“We remain open to direct engagement with international tech companies to accelerate the practical implementation of the government’s proposed approach.”
Multinational tax loopholes a risk
The government is unsure whether Microsoft (which owns LinkedIn) and Apple will be covered by its $250m threshold but is confident it will apply to Alphabet (which owns Google), Meta, and ByteDance (which owns TikTok). Minister Jones said he was “certain” X (formerly Twitter) would not be covered.
In a statement, a TikTok spokesperson said it was “an entertainment platform [and] has never been the go-to place for news. We will actively engage in the consultation process and look forward to hearing more details”.
DIGI, an industry group that lobbies on behalf of social media platforms, said there were “many unanswered questions” about the government’s plan.
“This proposal sees a small subset of one sector being forced to commercially subsidise another, and we don’t believe such a tax exists in any other area of the economy,” a spokesperson said.
An additional complication is that many of these global companies have long been accused of structuring their tax affairs to “realise” money they make elsewhere in low-taxing countries such as Ireland or Singapore.
The Australian government is part of long-running global efforts to stamp out this practice, but the new tax could bolster the incentive for tech platforms to take advantage of any available loopholes.
-ABC