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If Zuckerberg doesn't appear, Canada should retaliate financially by putting a tariff on Facebook ad sales from Canadian advertisers. (And they could donate 100

If Zuckerberg doesn't appear, Canada should retaliate financially by putting a tariff on Facebook ad sales from Canadian advertisers. (And they could donate 100% of the tariff revenues to some non-profit that invests in local journalism.)

Waterluvian 7y ago
That got me thinking. Has Canada tariffed anything that wasn't in response to tariffs?
lstamour 7y ago
Just like how China doesn’t pay the tariff, it’s US importers who do, in this case Facebook doesn’t pay the tariff, it’s Canadian advertisers that would, on top of whatever Facebook is asking for. It would only hurt Facebook if you applied a fine or tax directly to their Canadian profits or prevented them from doing business in Canada, and even then... with other countries, the sway is, “you’re a citizen of our country, you have to follow the law, it’s easier that way” but if you’re not actually a citizen, have legal defense and possible substitutions in place, and ultimately, the only penalty is likely a slap on the wrist and a request you somehow further can’t ignore, well... it comes back to other countries on their own don’t have sway if the US or host nation doesn’t make the same request and you don’t have immediate travel plans to that country (and, of course, the country follows rule of law and/or you’re protected by your host country’s legal system...) That said, anyone in the country making such a request that works for an affected company would have to follow the laws of that host country over company dictates, or face legal consequences...
- reasonablemann 7y ago
  And Canadian advertisers might choose a cheaper alternative to FB as a result.
  - lotsofpulp 7y ago
    Seems like a win for Canadian Facebook users as they would get to see fewer ads.
    - sjwright 7y ago
      Well they’d see fewer local ads.
- ThrustVectoring 7y ago
  Many taxes can get passed onto the buyer of the taxed good, but I'm not convinced that digital advertising is one of them. Roughly speaking, digital advertisers like Facebook and Google end up selling 100% of their inventory of views at a price set by the value of the conversions driven to the ad buyers. Adding a tax in this model forces advertisers to lower bids in order to remain profitable, which then forces the advertising platform to lower prices to continue selling 100% of their inventory. This is the same economic modeling behind the incidence of land-value taxes falling on landlords, not renters. When you're taxing a product of fixed size that is priced at whatever the market will bear, taxes get taken out of the owners' economic rents.
  - lstamour 7y ago
    This logic assumes transparent pricing and that bids from international companies not subject to the tax won’t take over Canadian bids forcing prices back up to where they were... and I bet multinational organizations would avoid the tax by having US services bid for them. If the tax is on ads shown to Canadians rather than ads paid by Canadian companies, I don’t see how the government can force it short of banning Facebook altogether.
aetherson 7y ago
Is Canada allowed to do that? The United States wouldn't be: it's a bill of attainder. The government donating to specific non-profits is sketchy as hell, too. Both of your solutions sounds like considerably more serious problems than Zuckerberg refusing to appear.
- tdhoot 7y ago
  Even in America there has been a recent troubling trend towards Department of Justice settlements being used to direct money to specific non-profits [0]. There was an effort to outlaw these settlements but it seems to have gone nowhere. [0]: https://thehill.com/blogs/congress-blog/judicial/305055-reforming-the-dojs-corporate-settlement-bonanza https://thehill.com/blogs/congress-blog/judicial/305055-refo...
- sjwright 7y ago
  As philwelch said elsewhere, it could be implemented as a normal tax and have much the same effect—as long as the legislation could be sufficiently narrowed to social media e.g. “sites where the content is predominantly generated by its customers.”
philwelch 7y ago
I think there's a free trade agreement (formerly NAFTA but they rebranded it) that gets in the way of Canada being able to arbitrarily set tariffs on the United States (let alone on one particular US company). However, I don't know that Canada has any large social media companies, so they can just make it a normal tax and possibly get away with it.
sumedh 7y ago
What if the Canadian company uses shell company in the US to place the ads?

Waterluvian 7y ago

That got me thinking. Has Canada tariffed anything that wasn't in response to tariffs?

lstamour 7y ago

Just like how China doesn’t pay the tariff, it’s US importers who do, in this case Facebook doesn’t pay the tariff, it’s Canadian advertisers that would, on top of whatever Facebook is asking for. It would only hurt Facebook if you applied a fine or tax directly to their Canadian profits or prevented them from doing business in Canada, and even then... with other countries, the sway is, “you’re a citizen of our country, you have to follow the law, it’s easier that way” but if you’re not actually a citizen, have legal defense and possible substitutions in place, and ultimately, the only penalty is likely a slap on the wrist and a request you somehow further can’t ignore, well... it comes back to other countries on their own don’t have sway if the US or host nation doesn’t make the same request and you don’t have immediate travel plans to that country (and, of course, the country follows rule of law and/or you’re protected by your host country’s legal system...) That said, anyone in the country making such a request that works for an affected company would have to follow the laws of that host country over company dictates, or face legal consequences...

reasonablemann 7y ago
And Canadian advertisers might choose a cheaper alternative to FB as a result.
- lotsofpulp 7y ago
  Seems like a win for Canadian Facebook users as they would get to see fewer ads.
  - sjwright 7y ago
    Well they’d see fewer local ads.
ThrustVectoring 7y ago
Many taxes can get passed onto the buyer of the taxed good, but I'm not convinced that digital advertising is one of them. Roughly speaking, digital advertisers like Facebook and Google end up selling 100% of their inventory of views at a price set by the value of the conversions driven to the ad buyers. Adding a tax in this model forces advertisers to lower bids in order to remain profitable, which then forces the advertising platform to lower prices to continue selling 100% of their inventory. This is the same economic modeling behind the incidence of land-value taxes falling on landlords, not renters. When you're taxing a product of fixed size that is priced at whatever the market will bear, taxes get taken out of the owners' economic rents.
- lstamour 7y ago
  This logic assumes transparent pricing and that bids from international companies not subject to the tax won’t take over Canadian bids forcing prices back up to where they were... and I bet multinational organizations would avoid the tax by having US services bid for them. If the tax is on ads shown to Canadians rather than ads paid by Canadian companies, I don’t see how the government can force it short of banning Facebook altogether.

aetherson 7y ago

Is Canada allowed to do that? The United States wouldn't be: it's a bill of attainder. The government donating to specific non-profits is sketchy as hell, too. Both of your solutions sounds like considerably more serious problems than Zuckerberg refusing to appear.

tdhoot 7y ago
Even in America there has been a recent troubling trend towards Department of Justice settlements being used to direct money to specific non-profits [0]. There was an effort to outlaw these settlements but it seems to have gone nowhere. [0]: https://thehill.com/blogs/congress-blog/judicial/305055-reforming-the-dojs-corporate-settlement-bonanza https://thehill.com/blogs/congress-blog/judicial/305055-refo...
sjwright 7y ago
As philwelch said elsewhere, it could be implemented as a normal tax and have much the same effect—as long as the legislation could be sufficiently narrowed to social media e.g. “sites where the content is predominantly generated by its customers.”

philwelch 7y ago

I think there's a free trade agreement (formerly NAFTA but they rebranded it) that gets in the way of Canada being able to arbitrarily set tariffs on the United States (let alone on one particular US company). However, I don't know that Canada has any large social media companies, so they can just make it a normal tax and possibly get away with it.

sumedh 7y ago

What if the Canadian company uses shell company in the US to place the ads?