Google is opposing an online advertising tax reform that is currently being considered by the Canadian government. Jason Kee, Public Policy and Government Relations Counsel at Google Canada, said that the proposed tax change won’t be efficient because it doesn’t fit the way Internet works. In an interview with The Globe and Mail on Wednesday, Kee said that the proposal wouldn’t work in practice because it relies on advertisers paying for their ads to appear on specific websites and expects them to track their performance on each individual domain. Google Canada’s official said that advertisers aren’t paying to promote their products and services through specific websites but are instead looking to reach a certain audience regardless of its browsing habits.
The proposed change of the Income Tax Act would restrict Canadian advertisers from filing deductions on advertising through foreign websites and ad networks like Google AdWords. A similar regulation is already in place for traditional media outlets like radio and television stations but as things stand right now, Canadian firms can still advertise through foreign-owned online platforms without paying additional tax. If enacted, the tax reform could increase the revenue of the Canadian media industry by a significant margin as it would make advertising through Google AdWords and similar platforms more expensive. Canadian lobbying groups are describing the proposed tax change as a way “to level the playing field” with Google and other advertising giants, but Google is claiming that the reform will either do the opposite or not do anything at all since it’s difficult to enforce. Kee also criticized the proposed reform by saying how it’ll likely hurt small businesses which don’t have the resources to pay for direct advertising with large outlets.
Ottawa still isn’t sure whether it’s going to promote advertising with Canadian media through penalties or tax credits, but major regulatory changes are seemingly on the horizon as the traditional media industry in the country continues to struggle and is frequently announcing new layoffs. While it remains to be seen how Canada will support its media industry, it seems likely that its solution will directly affect Internet giants like Google and Facebook.