Making lemonade: How digital tax could fund public interest journalism

By Nqaba Matshazi | 1h ago

Two weeks ago, I attended belated World Press Freedom Day commemorations hosted by Zimpapers in Harare.

I was given a two-minute slot to give a solidarity message to an audience that included staff, executives, school pupils and journalism students.

The guest of honour was Mangaliso Ndlovu, who was acting as the Information minister and he was accompanied by Nick Mangwana, the ministry’s permanent secretary.

In my submissions, I mentioned that I did not like the Digital Withholding Services Tax (DSWT), as it was an extra burden on an already overtaxed citizen.

My dislike for tax is driven by the fact that for example, Apple, whose app store I use for a lot of things, actually has a tax number in this country, meaning the company pays tax in Zimbabwe.

So, if Apple charges me US$11.99 for an app, the company also pays a 15.5% VAT rate for online payments.

Apple retains US$10.38 for the app and the Zimbabwean government gets US$1.61, bringing the total to US$11.99.

However, when my bank processes the payment, they do not care that Apple has already paid tax and instead, they compound the charge.

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The bank levies 15.5% on $11.99 and adds an additional bill of US$1.86. So, the effective tax rate becomes much higher than what the government has gazetted.

So instead of paying US$1.61 in VAT, I end up paying US$3.47. So imagine this process being repeated over several apps that I use.

It might look like pocket change at face value, but over the course of a year and over several apps, this is a mini fortune.

Also, I can argue that double taxation is morally wrong, but that is an argument I will leave to economists and political philosophers.

I have been informed that I can approach the Zimbabwe Revenue Authority and claim a refund for this double taxation, but the effort and time spent on this endeavour might not be worth it.

While I do not like the DSWT for the reasons above, I proposed that, instead, the Information ministry should lobby for a percentage of that tax, whatever the amount and plough it back into journalism and media in Zimbabwe.

This is not the best situation, but if life gives you lemons, then maybe try making lemonade – making the best of a terrible solution, if you like.

The DSWT ostensibly taxes big tech companies that are supposedly not remitting tax to Zimbabwe.

On the other hand, big tech companies like Facebook, Google and Apple among others are responsible for the decline in media consumption globally and my argument was that if we are to pay taxes for using these platforms, it is only fair that they also contribute to sustaining journalism in the country.

I further argued that no matter how innovative media companies become, they would struggle to make sustainable profits and the answer lay in policy interventions rather than a siloed approach to monetisation in an increasingly technologically driven world.

I know it is a long shot, but if the Information ministry were to lobby to get even a small percentage of the DSWT, this money could be used to fund public interest journalism such as reporting on climate change, health and gender among many other topics.

Public interest journalism is news reporting that investigates, exposes and explains matters of societal importance to help citizens make informed decisions and hold power to account.

It prioritises civic education, public safety and transparency over mere entertainment or commercial gain.

Unesco, further defines information as a public good. Information as a public good is reliable, verifiable and freely accessible knowledge that serves the general public interest.

It argues that because information empowers citizens, ensures human rights and drives sustainable development, it must be protected against censorship, monopolisation and misinformation.

It is almost universally accepted that information is a public good and, thus, an argument can be made that information can and should be funded like other public goods.

Styli Charalambous takes this issue further, he argues that we accept as normal public funding for education, healthcare, transport infrastructure and countless other public goods that markets undersupply.

He argues that industries like banks have been bailed out during the global financial crises, film productions get subsidies all over the world. New industries often get a leg up with tax breaks or grants to kick start economic interest.

So, in that regard, a case can be made for the funding of public interest journalism.

I am not proposing an additional tax, but rather for the Information ministry to make a case to their counterparts at finance on how policy interventions can save an industry that is on its last legs, yet it is central to governance, civic engagement and public participation.

However, I am alive to the fact that this government has a penchant for control and I can imagine what would happen if they were to put money into journalism.

One way of avoiding compromising editorial independence is by relying on structural arm’s-length mechanisms.

This approach prevents direct political interference by distributing funds through independent, multi-stakeholder agencies, implementing non-partisan indirect subsidies and supporting multilateral or pooled funds.

For instance, Australia passed a law requiring Facebook and Google to negotiate content deals with media outlets, which resulted in big tech injecting significant funds into the journalism sector.

Canada signaled a similar approach.

Zimbabwe's DSWT revenue could just be a different mechanism to achieve the same globally recognised objective.

I am aware that this was tried with Mass Media Trust in the early 1980s, but it was a failure, as the government soon found a way to control, weaken and take over the body.

But, at least, we have a place to start from and something to build on for the future.

Unfortunately, I was misunderstood by Mangwana, who was more intent on defending the DSWT, but without interrogating what I had proposed the tax could be used for.

He seemed to take umbrage at my directness in stating that I did not like the DSWT. He jokingly said he would want the tax reviewed upwards.

His argument was that Google, Apple, Netflix, Spotify and others were taking money out of Zimbabwe and should pay tax, a fair argument, I think.

However, he forgot to mention that some of these companies were already paying taxes in Zimbabwe, as the example above shows.

In addition, he said these platforms were blocking us from consuming our own content, which I did not understand, as people have a choice on what to consume.

The issue is really not about content choice, but rather about the economic dominance of big tech, which redirects advertising revenue away from local media, regardless of consumer choice.

I brought up the tax because it was one of the many policy interventions that could be deployed to ensure sustainable journalism.

My point was on media viability, rather than the nuts and bolts of a tax.

So, in light of this, there is no harm in suggesting that such money could be used to fund public interest journalism and improve citizens’ access to information.

While the government has made strides in improving access to information, this means precious little if citizens do not have access to accurate, verified and reliable news that the media is best placed to provide.

Thus, the government has a central role in ensuring media viability and the funding of public interest journalism.