Hit web giants for tax billions
Posted by Jamie at 8 21 PM on Saturday, May 2
THE Government plans to hit internet firms like Google and Facebook with a new online advertising tax to give more cash to the bloated BBC.
Ministers are desperate to find extra money for state-owned broadcasters.
But it would leave firms like Google with demands for over £100million — and force internet companies to charge for services such as email, search engines and social networking.
A Whitehall source said: “We need to fund public sector broadcasters like the BBC and Channel 4. The latest idea is a tax on online advertising. The money would go to the broadcasters.”
But ministers have been warned the barmy plan would be a disaster. As well as internet charges the tax would also cripple new firms trying to enter the industry. The BBC already receives £3.4 billion from the licence fee and Channel 4 gets a £30 million subsidy.
The Government plans to unveil the new tax this month in the Digital Britain report drawn up by Communications Minister Lord Carter and Culture Secretary Andy Burnham.
Online adverts on sites like Google, Facebook, MySpace (owned by the same parent company as the News of the World), and YouTube would be taxed.
Newspapers and commercial TV sites — increasingly reliant on internet ads — would also be hit.
The level of tax is not known. But a similar idea in France, which was torpedoed, was to take one per cent of a company’s ad profits. It would be on top of corporation tax and VAT.
Channel 4 is in dire straits. It claims it will have an annual shortfall of £150 million by 2012.
Chief exec Andy Duncan is taking a voluntary pay-cut this year, but he will still pocket £600,000. Director of Television Kevin Lygo will take a cut to £575,000.
The BBC has announced £400 million of “painful” cuts. The corporation has promised to slash stars’ salaries, dump lavish hospitality, axe bonuses and clamp down on expenses.
It has axed 7,200 jobs. But its bosses still trouser a fortune. Director-general Mark Thompson’s package is worth £816,000.
The chairman of the House of Commons Culture Committee, John Whittingdale, said: “Ultimately it will be the consumer who pays. People expect email, search engines and social networking for nothing. But the only reason they are able to get them for free is the adverts.”