Parliamentary Committee backs PPA call for zero rate VAT and CMA investigation into online advertising

Amy Owens

On Monday, the Digital, Culture, Media and Sport (DCMS) Select Committee published its final report on Disinformation and ‘fake news’

The report covers the regulation of tech companies, data storage, advertising and political campaigning, foreign influence in political campaigns and digital literacy. 

Following an 18-month inquiry examining individual’s privacy rights and interference in elections in the UK and around the world, the report calls for: 

• Compulsory Code of Ethics for tech companies overseen by an independent regulator

• Establishing a new regulator with powers to launch legal action against companies breaching this code

• Reform of current electoral communications laws and rules on overseas involvement in UK elections

• New obligation on social media companies to take down known sources of harmful content, including proven sources of disinformation 

Further to these recommendations, the report welcomed findings and recommendations set out in the Cairncross Review and supports the call that online digital newspapers and magazines should benefit from zero-rate VAT, stating:

“We welcome Dame Frances Cairncross’s report on safeguarding the future of journalism, and the establishment of a code of conduct to rebalance the relationship between news providers and social media platforms. In particular, we welcome the recommendation that online digital newspapers and magazines should be zero rated for VAT, as is the case for printed versions. This would remove the false incentive for news companies against developing more paid-for digital services. We support the recommendation that chimes with our own on investigating online advertising, in particular focussing on the major search and social media companies, by the Competitions and Markets Authority.”

Commenting on the report, PPA Public Affairs Executive, Amy Owens said:

“This is a detailed report and makes a number of welcome recommendations. This is the second report in as many weeks to back our call for the extension of the VAT zero rate to digital publications, and we hope the government will act quickly to do so. 

“The committee also backs our call for a full review of the online advertising market to be conducted by the Competition and Markets Authority (CMA).” 

Speaking out on the report’s findings, committee chair Damian Collins MP commented: 

“The big tech companies are failing in the duty of care they owe to their users to act against harmful content, and to respect their data privacy rights.

“Companies like Facebook exercise massive market power which enables them to make money by bullying the smaller technology companies and developers who rely on this platform to reach their customers.

“These are issues that the major tech companies are well aware of, yet continually fail to address. The guiding principle of the ‘move fast and break things’ culture often seems to be that it is better to apologise than ask permission. 

“We need a radical shift in the balance of power between the platforms and the people…”

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