Facebook could be hit with a new tax over threat to ban Australian news

An extraordinary threat by Facebook to ban all Australian news has backfired, with a warning that it could be slapped with a massive new tax.

Facebook could be hit with a massive brand new tax if it moves forward with its threat to block all Australian users from sharing news on its platform.

On Tuesday, the social media giant said it would ban the sharing of news in Australia on Facebook and Instagram if the government pushed forward with changes that would force social media platforms to pay media companies for their content.

But it has since been revealed that such a move from Facebook could actually see the platform hit with a new tax on all digital transactions, which could cost the company millions.

Former Australian Competition and Consumer Commission (ACCC) chairman, Professor Allan Fels, said the government would have already anticipated this reaction from Facebook.

“The government and the ACCC have anticipated [their refusal] and drawn up draft legislation that’ll be harder to avoid,” Professor Fels told the Australian Financial Review.

“And also they’ve got a very big stick in the cupboard. They could drop the code and just apply a tax – a general tax on digital transactions. And the platforms have far more to lose from that.”

Former ACCC chairman Professor Allan Fels, said the Australian government could impose a new tax on Facebook if it refuses to comply with the changes.

Treasurer Josh Frydenberg also warned there would be “substantial penalties” if Facebook failed to pay Australian media organisations for their content.

“Australia makes laws that advance our national interest,” Mr Frydenberg said.

“We don’t respond to coercion or heavy-handed threats wherever they come from. Our reforms to digital platforms are world-leading and following a groundbreaking 18-month inquiry by the ACCC.”

The ACCC took aim at Facebook’s threat, saying it hoped “all parties will engage in constructive discussions”.

“The draft media bargaining code aims to ensure Australian news businesses, including independent, community and regional media, can get a seat at the table for fair negotiations with Facebook and Google,” ACCC chairman Rod Sims said in a statement.

“Facebook already pays some media for news content. The code simply aims to bring fairness and transparency to Facebook and Google’s relationships with Australian news media businesses.”

Facebook first announced its plan to ban Australian news content on Tuesday morning, with Australia and New Zealand managing director Will Easton saying it was not the company’s “first choice”.

Facebook has threatened to ban all Australian users from publishing news content if the government goes ahead with the proposed changes. Picture: Denis Charlet/AFP

“Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,” he said in a statement.

“This is not our first choice — it is our last. But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia’s news and media sector.”

Mr Easton said Facebook objected most strongly to the “perplexing” argument that Facebook should “pay news organisations for content” while ignoring “the financial value we bring publishers”.

“The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true,” he said.

“News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us.”

Mr Easton claimed the company was left with only two choices due the changes being put forward by the Australian government.

“Instead, we are left with a choice of either removing news entirely or accepting a system that lets publishers charge us for as much content as they want at a price with no clear limits,” he said.

“Unfortunately, no business can operate that way.”