MeetMichael Digital Marketing & E-Commerce founder Michael Micacchi says businesses of all sizes will feel additional financial pressure once the surcharge goes into effect on October 1.
Mr. Micacchi’s company, based in Waterloo, Ontario, provides digital marketing and advertising services.
If someone can afford to invest $500 or $5,000 a month in advertising, any extra charge, like 2.5% in this case, will have an impact, he says.
According to Michael Micacchi of MeetMichael Digital Marketing & E-Commerce, businesses looking to advertise in Canada often have no choice but to go with Google.
Photo: Courtesy of Michael Micacchi
In October, Google will begin charging a 2.5% surcharge for all businesses advertising on Google in Canada. The surcharge is intended to cover some costs related to the Digital Services Tax Act, which implements the digital services tax, Google says.
On its website, Google indicates that the supplements will be added [aux] Google Ads fees at the end of each month, and the corresponding amount will be charged on the next billing date.
Finance Minister Chrystia Freeland is defending a controversial new tax on internet giants like Google, Amazon and Netflix. She says the tax will raise billions of dollars in revenue, but experts say consumers will end up paying more.
Photo: The Canadian Press / Adrian Wyld
We will continue to pay all taxes owed in Canada and elsewhere, and we encourage governments around the world to focus on international tax reform rather than implementing [des mesures] unilateral, Google said in a statement.
Multinational digital companies like Meta, Alphabet, Facebook and Amazon are not based in many of the countries where they operate, allowing them to pay their taxes elsewhere.
Many countries, such as France, Austria, India, Italy, Spain and the United Kingdom, have already implemented their own digital services taxes.
Ottawa defends
On its website, the federal government says the digital services tax is a way to protect the interests of Canadians by ensuring that all companies, including the world’s largest corporations, pay their fair share.
In an email, the spokesperson for the Minister of Finance, Chrystia Freeland, recalled that the Canadian government has clearly indicated, for several years, that it would move forward with its own tax on digital services if a global agreement was not reached.
Katherine Cuplinskas added in her statement that the federal government had not reached a multilateral agreement despite all efforts.
No other choice, experts say
Most business owners have no choice but to advertise on Google and Facebook, notes Michael Micacchi.
If you’re not advertising on Google, you’re probably doing something wrong, he says.
The vice-president of national affairs at the Canadian Federation of Independent Business (CFIB), Jasmin Guénette, is also sounding the alarm.
According to him, companies have no choice but to face this additional cost that Google imposes for its advertising services.
Small and medium-sized enterprises (SMEs) are already facing a significant increase in operating costs. All costs are increasing, notes Mr. Guénette.
The Canadian Federation of Independent Business represents more than 97,000 members, primarily small and medium-sized business owners.
Photo: Courtesy / Canadian Federation of Independent Business
He explains that many merchants must adapt to the post-pandemic habits of Canadian consumers.
There are a few big players that dominate online advertising, so if you want to reach the customer base, you have no choice, he said.
Google is so dominant that even if it increases its fees by 2.5%, there are many small and medium-sized businesses that will still pay because otherwise, they are depriving themselves of a certain important clientele, explains the vice-president of the Canadian Federation of Independent Business (CFIB).
Some of these costs would potentially be passed on, in turn, to consumers.
Is anyone really surprised that Google has decided to pass this surcharge, or part of it, on to businesses and small businesses? asks Michael Micacchi.
Right now, I just feel like we’ve been left behind, he said.
With information from Keena Alwahaidi of CBC News
