Friends of Canadian Broadcasting calls for an end to tax subsidies for U.S. social media giants

Most people have no idea that companies like Facebook, Google, Amazon, and Netflix don't have to play by the same rules as Canadian broadcasters.

Unlike Bell Media, Rogers Media, Shaw, and even the Knowledge and TVO networks, the U.S. tech giants are not subject to regulation by the Canadian Radio-television and Telecommunications Commission.

That's not all.

The Income Tax Act also offers a break to the U.S. tech behemoths that sell advertising.

Companies that buy ads can normally only write them off as a business expense if the newspaper or broadcaster is owned by a Canadian company. [See note 1 at the bottom of this article.]

This incentive is supposed to promote the growth of domestic media.

Facebook, Google, and Amazon, on the other hand, aren't subjected to this rule because, get this, they're not media outlets.

That's prompted Friends of Canadian Broadcasting to launch an online petition asking four federal party leaders—Justin Trudeau, Andrew Scheer, Jagmeet Singh, and Elizabeth May—to "officially commit to closing the internet advertising tax loophole at once".

It's estimated that more than 70 percent of all digital advertising in Canada goes to Facebook and Google.

According to the Friends of Canadian Broadcasting, the loophole has caused "nearly $6 billion to leave the country, at the expense of Canadian journalism and democracy".

The loss of tax revenue alone is $1.6 billion, Friends says, because advertisers can write off messages on Facebook, Google, and Amazon.

"Meanwhile, professional Canadian journalism is struggling for surival," the group states. "It doesn't have to be this way."

Friends has launched digital radio ads to spread the message. You can listen to two of them below.

Footnote

1. Postmeda Network Canada Corp. has identified New Jersey–based Chatham Asset Management Corp as owning "a significant portion of the Variable Voting Shares and a portion of the New Second-Lien Notes".