It’s no day at the plage
operating a giant, successful, multinational American company, once you’ve run up against some very un-American notions about tax policy from abroad. Such as the “data tax” on Amazon
(NASDAQ:FB) and Google
(NASDAQ:GOOG), about to be proposed by France for adoption by the European Union.
Apparently, France would like to impose a data transmission tax on those companies -- and only those companies -- because they are the dominant platforms for Internet usage in Europe just as they are in the US, but they are “non-European,” that is, American. Their dominance therefore prevents European competitors from emerging from obscurity. (How taxing the most popular sites will make other sites more popular with consumers is not clear.)
A French member of the European Parliament tells the Wall Street Journal
that a data tax should be imposed because the European nations have become “just the puppets of financiers and multinationals.”
Or, as Forbes puts it in a now-classic headline
: “Gibbering Nonsense From France About Apple, Google, Facebook and Amazon.”
The tax plan is just one piece of a proposal that would establish a new Internet regulatory agency within the European Union. In part, the agency would be empowered to impose other rules aimed at leveling the playing field for European competitors, such as forcing the American companies to enable portability among devices for digital purchases.
French Technology Minister Fleur Pellerin told the Wall Street Journal
that the absence of such regulations is effectively “blocking innovation from all of the other actors,” and making it difficult for European companies to emerge.
The call for regulation gets real impetus from another issue that has entangled US technology companies in Europe: data privacy. The issue gained a great deal of heat after revelations of the US government’s continuing collection of private data on a massive scale, and with the cooperation of some of its biggest technology companies.
The proposals are expected to be presented in late October at a summit of European leaders.
At this point, the data transmission tax is the part of the proposal that seems least likely to succeed.
For one thing, it’s not clear how such a usage-based tax could be imposed, though Pellerin told the Financial Times
that her agency is looking at data transfer, traffic, and interconnection to work out how the big Internet companies make their money and, therefore, what part of their (free) services could be taxed.
In addition, it appears that Great Britain will oppose
the idea, according to the British newspaper The Telegraph
, not least because the European Union does not currently have the power to levy taxes.
The proposal appears to have the support of European telecoms, which have long resented the low tax rates enjoyed by American companies that are, after all, using the physical networks the telecoms built.
In an opinion piece for the Financial Times
, British technology executive Joanna Shields argued that regulating the Internet would inevitably harm European startups as much as American businesses.
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