Friday, July 13, 2012

The cost of foreign ownership

Scoop today has an editorial about the state of the media, presented as part of NetHui. In passing, it highlights the cost of open markets and foreign ownership. Currently, the New Zealand media is starved of revenue due to the internet disrupting its traditional advertising base. While internet advertising could potentially fill some of that gap - its worth $330 million a year - but most of it is foreign-owned, meaning the money goes straight offshore. But it gets worse:

And on most of this revenue (thanks to the great Irish tax dodge - and in Fairfax's case masthead writedowns) no tax is being collected either.

Practically speaking this means that revenue which was previously supporting the creation of NZ content is no longer doing so - in ever larger quantities. While newspapers are the worst hit, TV and radio are also having a hard time.

Finally it is worth noting that the tax avoided in the NZ online advertising market alone is significantly greater than the cost of supporting TVNZ7.

(Emphasis added. Google's cheating of the New Zealand taxpayer was uncovered by Stuff last year)

This is the cost of having great chunks of our economy owned by foreign tax cheats: not only do the profits go offshore, but they do so in ways which rob the government of revenue, and therefore us of public services. People might want to keep that in mind when considering the government's plans to privatise SOE's.