Credit: andresr In light of news that Australia plans to “resume work on fresh laws aimed at forcing tech firms to pay for news”, the Trump Administration has an opportunity to address discriminatory “link taxes” that target U.S. companies. As the digital sector grows in importance, policymakers and stakeholders are increasingly pushing back against policies that prioritize revenue transfers from one industry to another.
Although it is critical to ensure journalists and local publications can continue reporting crucial information to the communities that need them most, Australia’s proposed changes to its Bargaining Code in the form of a discriminatory tax would not solve the issues facing the news industry in a sustainable way, just as the original law has failed to do so as well. Rather, these efforts falsely place the blame for the digital transition on the very services that allow journalists and publishers to reach new audiences.
Australia’s proposed addition to the Code in the form of a discriminatory tax represents a coercive measure designed to extract payment from U.S.-based digital services. The proposal’s lack of detail means its impact cannot yet be measured in the same way as digital services taxes can be measured, like the USD $2.7 billion that was expected to be generated by Canada’s proposed and now rescinded effort. However, this does not mean that a link tax is any less egregious, or that policymakers pursuing them should not anticipate similar pushback.
While link taxes and DSTs are not identical, they share similarities. DSTs are intended as a traditional fiscal measure, whereas Australia’s “incentive tax” is intended as a coercive measure designed to direct payments to private parties. Nevertheless, each are taxes, each are assessed on revenues, rather than profits, and most importantly, each are discriminatory–targeting U.S. firms for extractive payments, while sparing local competitors. Accordingly, both are bad policies, inconsistent with trade obligations, and thus each are likely to elicit a strong criticism.
The Australia section of a crucial annual Report from U.S. trade officials signals a potential avenue to address these discriminatory practices by discussing its ongoing monitoring of the Mandatory Bargaining Code. By formally identifying link taxes as trade barriers that merit monitoring and potential U.S. government scrutiny, the Trump Administration has the opportunity to address these in ongoing, high-level trade negotiations. Moving forward, the U.S. Government should consider utilizing the tools of trade policy to ensure nondiscriminatory access, a competitive market, and freedom of information sharing on the internet.
A more detailed explanation of this unwarranted proposal is available here. CCIA continues to strongly press for the abandonment of this misguided policy and welcomes USG support in this ongoing effort.
