By the Daily Post staff
A bill to tax Google, Facebook and Amazon to fund a tax to support the local news industry has survived a close vote in the state Senate Appropriations Committee and will go to the Senate floor for a full vote.
The 7.25% tax on digital advertising will raise an estimated $500 million a year to fund local news organizations whose work has been used for free by those tech companies.
But the tax, contained in Senate Bill 1327 by Sen. Steve Glazer, D-Contra Costa, has been labeled a “job killer” by the California Chamber of Commerce because it will require small businesses to pay more to advertise online.
“This bill punitively targets only a handful of taxpayers that sell digital advertising, yet will financially cripple many, many small and medium-sized businesses,” said CalChamber Senior Policy Advocate Preston Young. “The brunt of this tax will ultimately be borne by smaller employers that rely on advertising to increase the reach of their business.”
The bill, which will pay for hiring and retaining reporters, is supported by several labor groups including the California Federation of Teachers, unions representing reporters, and a number of struggling media outlets anxious for a government handout.
An analysis for the Senate said that while the newspapers would be getting taxpayer funding, the government would not get involved in decisions about news content.
Google already has a couple of programs meant to fund nonprofit local journalism, but the Mountain View-based company is telling those newsrooms that if SB1327 passes, the money they’ve been getting might stop, the news website Axios reports.
Google isn’t just upset about the digital ad tax but also a link tax (Assembly Bill 886) proposed by Assemblywoman Buffy Wicks. The threat of a link tax has caused Google to remove news links from its search results in California starting last month.
The left-leaning Chamber of Progress opposes the digital ad tax, saying that the money would only go to newspapers with full-time reporters, leaving out smaller independent and foreign-language publications that can’t afford full-time employees. Robert Singleton of the Chamber of Progress said in a letter to the Senate that the money will disproportionately go to right-wing media companies such as Sinclair Broadcast Group, owner of four TV stations in California.
Another winner, Singleton predicted, will be MediaNews Group, which he says has gutted newspapers like the Mercury News, leaving them “shell of their former selves.”
“In short: SB 1327 will reward the bad actors who decimated California journalism,” Singleton said in a letter to senators.
The Senate Appropriations Committee approved the bill on May 16 by a 4-2 vote, with state Sen. Josh Becker, D-Menlo Park, absent. If approved by the Senate, the bill will go to the state Assembly and then to Gov. Gavin Newsom for his signature.
If approved, opponents warn that the bill will be challenged in court like similar legislation in Maryland. That law, passed in 2020, is still tied up in the courts.