Fri. Mar 1st, 2024

Louis Audet calls for media tax reform | Standoff between web giants and Ottawa

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The chairman of the board of directors of Cogeco, Louis Audet.

Radio-Canada

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Cogeco board chairman Louis Audet calls for tax changes to protect local media in Canada.

Buying advertising in a traditional foreign media is not tax deductible for an advertiser based in Canada.

However, this law does not apply to digital media like Google or Facebook.

And ad buying in digital media has seen a substantial jump in the last 20 years. It increased from 3% in 2003 to 70% in 2023.

This has led to a decline in advertising revenues for Canadian media as web giants swallow up the lion's share of corporate investments.

Tug of war between web giants and Ottawa

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Louis Audet indicated in an interview on the show Zone économique broadcast on RDI that advertising investments in Canada are of About $14.3 billion per year, of which $10 billion is spent by Canadian companies in the United States on American digital media.

A mechanism has existed since the 1960s which provides that when a Canadian company incurred an advertising expense on non-Canadian media, whether magazines, radio stations, newspapers, television stations, the expense was not deductible for advertising purposes. taxes. That's what kept Canadian media alive from 1960 until about 20 years ago, he explained.

But for 20 years, the dominant media – which are American – have been able to escape this section 19 measure so that now the spending is going outside of Canada. Meanwhile, in Canada, radio stations are closing, television channels are reducing their staff by a third, 20%. It's carnage. However, the tools are at hand to resolve the problem, he laments.

When an advertiser makes an advertising investment in Google, for example, he benefits from a deduction for tax calculation purposes. There should no longer be this deduction, believes Mr. Audet.

The media survived until the arrival of digital technology because this protection – this allowed them to prosper.

A quote from Louis Audet, chairman of the board of directors of Cogeco

According to Mr. Audet, a company pays about 25% of its profits in taxes. But if the company cannot deduct this expense, i.e. the advertising investment, it would cost it about a third more. So, it becomes an additional cost, he points out.

Mr. Audet suggests that there be reflection on this subject to find a way to save local media.

There is still $10 billion, that’s a lot of money, being spent on American digital media. It could be that to make a difference, we would also have to add a tax credit for people who buy Canadian media. That could be. There is a reflection to be made, a calculation to be made, he suggested.

Regarding the agreement between the federal government and Google, which will bring $100 million to Canadian media, Mr. Audet believes that this agreement will dressings on bleeding wounds.

In short, the agreement with Google will result in a distribution of $100 million. That’s 1% of the $10 billion spent in the United States. It's nothing.

For Canadian media to prosper, we need to bring back that 10 billion or a significant portion of that 10 billion so that they are spent in Canadian media, he assures.

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