Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

If tech giants paid NZ's Telecommunications Development Levy


In the UK, the Labour Party plans to nationalise part of the telecommunications network if it wins this year's election.


To cover costs, a Labour government will tax multinational tech giants including Google and Facebook.


Let's put aside the idea of nationalisation1. Instead, let us focus on the idea of making tech giants contribute towards the cost of telecommunications networks.


Not ridiculous


The idea isn't ridiculous. Google and Facebook made their fortunes on the back of telecom networks. In effect they had a free ride.


People who invested in building Spark, Vodafone, Chorus and the rest of New Zealand's telecommunications networks have, up to a point, subsidised the tech giants.


A decade ago there was talk in telecom circles about recapturing some of the value taken by over-the-top companies.


That battle was lost before it started.


It could be impractical and difficult for a small nation like New Zealand to force tech giants to pay all the costs of our telecommunication network.


That would remove price signals. These are important. They help the industry squeeze value from the assets. They tell planners where to invest.


Jangling the gold


There is one area where we can hold Facebook, Google and maybe other tech giants upside down and jangle the coins out of their pockets.


We could get them to contribute to our Telecommunications Development Levy.


This is the money collected by the government to help subsidise rural telecommunications. It also pays for things like the services that help blind and deaf people use phones.


At the moment the TDL is $50 million a year. It's called a levy, but it's really a tax on telecommunications companies. They each pay a share roughly based on how much they earn from sales.


As things stand today, Spark, Vodafone and Chorus pay the lion's share.


How it might work


Suppose, for one minute, we decide to treat income the digital giants earn from New Zealand on the same basis as local telco revenue.


We'll forget the smaller firms for now and focus on only two tech giants: Google and Facebook.


It's hard to know exactly how much these companies make in New Zealand. The Commerce Commission would be have a job extracting this data, but it is doable.


This NZ Herald story estimates Google made around $600 million here in 2017. The number for Facebook is hard to estimate. For the sake of argument, let's say it is much the same.


The total qualified revenue for New Zealand's telcos is $4.1 billion. If we add in the tech giant revenue that gives us $5.3 billion.


In round numbers that puts Google and Facebook's share at 20 percent of the total.


This means we could reasonably ask the two giants to stump up $10 million towards the TDL.


If we add in the other large companies who earn revenue on the back of New Zealand having a decent digital network that could take the total contribution from over the top money earners up to around a third of the TDL total.


Fair dealings?


It would be hard for anyone to argue such an approach is unfair. The amounts are, in comparison, tiny. A $10 million charge on $1.2 billion is less than one-tenth of one percent. It wouldn't even feature as a budget line item.


Tech giants make huge margins on their revenues. The charge need not have any effect on prices.


In comparison the profit margins for New Zealand's telecommunications companies are slender. Putting $15 million or so2 back into their hands wouldn't make a huge difference. It would ease their burden.


So there you have it. The company's that benefit most from investment in telecommunications can return a tiny trickle from their rivers of gold so that more New Zealanders can access their products and services. Is that so unreasonable?





  1. Maybe until another time. Maybe not.

  2. This presumes an expanded programme where more than just two tech giants contribute



© Scoop Media

 
 
 
Top Scoops Headlines

 

Ian Powell: Rescuing Simpson From Simpson

(Originally published at The Democracy Project ) Will the health reforms proposed for the Labour Government make the system better or worse? Health commentator Ian Powell (formerly the Executive Director of the Association of Salaried Medical ... More>>

Missions To Mars: Mapping, Probing And Plundering The Red Planet

In the first month of 2020, Forbes was all excitement about fresh opportunities for plunder and conquest. Titled “2020: The Year We Will Conquer Mars”, the contribution by astrophysicist Paul M. Sutter was less interested in the physics than the conquest. ... More>>

Richard S. Ehrlich: Coup Leader Grabs Absolute Power At Dawn

BANGKOK, Thailand -- By seizing power, Myanmar's new coup leader Commander-in-Chief Senior General Min Aung Hlaing has protected his murky financial investments and the military's domination, but some of his incoming international ... More>>

Jennifer S. Hunt: Trump Evades Conviction Again As Republicans Opt For Self-Preservation

By Jennifer S. Hunt Lecturer in Security Studies, Australian National University Twice-impeached former US President Donald Trump has evaded conviction once more. On the fourth day of the impeachment trial, the Senate verdict is in . Voting guilty: ... More>>

Binoy Kampmark: Let The Investigation Begin: The International Criminal Court, Israel And The Palestinian Territories

International tribunals tend to be praised, in principle, by those they avoid investigating. Once interest shifts to those parties, such bodies become the subject of accusations: bias, politicisation, crude arbitrariness. The United States, whose legal and political ... More>>

The Conversation: How To Cut Emissions From Transport: Ban Fossil Fuel Cars, Electrify Transport And Get People Walking And Cycling

By Robert McLachlan Professor in Applied Mathematics, Massey University The Climate Change Commission’s draft advice on how to decarbonise New Zealand’s economy is refreshing, particularly as it calls on the government to start phasing out fossil ... More>>

 
 
 
 
 
 
 
 
 
  • PublicAddress
  • Pundit
  • Kiwiblog