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UK Possibly Exploring "Google Tax" 312

Posted by ScuttleMonkey
from the price-of-success dept.
The UK government is considering proposals that could hit Google and other search engines with an online advertising tax to help boost revenue for the BBC. While these proposals are still in their infancy, some are already attacking the idea of taxing a growth industry in the middle of a recession. "Sources say the proposed taxes have been discussed by officials at the Department for Business, Enterprise & Regulatory Reform and the Department for Culture, Media and Sport. They would also have to be approved by the Treasury before they could be introduced. The chair of the culture, media and sport committee, Conservative MP John Whittingdale, dismissed what he called a 'windfall tax' on search engines."
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UK Possibly Exploring "Google Tax"

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  • some are already attacking the idea of taxing a growth industry in the middle of a recession.

    What, so adding more taxes to dying industries is such a hot idea?

    "Hey, we're making lots of profits - don't tax us!"

    • by WCMI92 (592436) on Monday May 04, 2009 @11:49AM (#27816495) Homepage

      What, so adding more taxes to dying industries is such a hot idea?

      "Hey, we're making lots of profits - don't tax us!"

      How about the government for once having to do what everyone ELSE has to do in a recession? Do with LESS.

      Here is how government works with respect to industry:

      If it moves, TAX it.

      If it survives, REGULATE it.

      If it doesn't survive, SUBSIDIZE it.

      I'm not saying that government should stay completely out of business with respect to consumer protection, and workplace safety, but it shouldn't be micromanaging or looking for ways to tax activity multiple times, which is what the UK is trying to do here. Google already pays taxes on earnings from their UK operations. What the government is wanting to do is essentially tax them AGAIN.

      This is why international corporations are packing up and moving operations to countries with less regulation and less taxation, and given that with anything that is internet based, you can run it from ANYWHERE, what the UK is doing is encouraging Google to remove any operation from their soil and to lose what revenue they get from them. And I wouldn't blame them for it.

      Businesses do not exist to funnel money into politicians coffers, they exist to make money.

      • This is why international corporations are packing up and moving operations to countries with less regulation and less taxation

        Just when "Obama Calls for New Curbs on Offshore Tax Havens [nytimes.com]".

        Falcon

        • Re: (Score:3, Insightful)

          by WCMI92 (592436)

          Just when "Obama Calls for New Curbs on Offshore Tax Havens [nytimes.com]".

          Which won't do a damn thing except cause American companies to become foreign companies (ie: change where they are incorporated).

      • by mi (197448)

        Here is how government works with respect to industry (rephrasing closer to the original -mi):

        • If it moves, TAX it.
        • If it keeps moving, REGULATE it.
        • When it stops moving, SUBSIDIZE it.

        Yes, this is exactly, what happened to the US car industry over the decades... The last stage is unfolding right now with the government not only subsidizing it itself, but arm-twisting private banks [abcnews.com] into similar subsidizing.

      • Re: (Score:3, Insightful)

        by Trepidity (597)

        How about the government for once having to do what everyone ELSE has to do in a recession? Do with LESS.

        I'm not sure there are significant groups of economists, on either the left or right or in between, who actually think it'd be a good idea for governments to run pro-cyclical fiscal policies. If the government spends more in good times, and less in bad times, it compounds both bubbles and recessions.

    • What, so adding more taxes to dying industries is such a hot idea?

      They may have been thinking along the lines of "don't cause another dot com crash, leave the internet alone, it's a miracle it hasn't gone down with everything else."

      On the other hand, I think a twitter tax would be the nail in the coffin for twitter. If it shuts people up about twitter, that might be one of my favorite taxes of all time.

    • by Mr. Underbridge (666784) on Monday May 04, 2009 @12:02PM (#27816685)

      What, so adding more taxes to dying industries is such a hot idea?

      Any time government gets involved to sort out winners from losers, the result is bad. Better idea is to tax things evenly, and let the winners and losers sort themselves out.

      In this case, the fact that the BBC can't find a valid business model isn't Google's fault, and shouldn't be their problem.

      • by madprof (4723) on Monday May 04, 2009 @12:13PM (#27816843)

        The BBC don't need a business model. It's funded by licence fees.

        Just not seeing the connection between Google and the BBC myself though...and it isn't as if this would be a hypothecated tax.

        • by jabithew (1340853) on Monday May 04, 2009 @12:26PM (#27817023)

          The issue is that it is possible now to watch all of the BBC's programming on demand for a week after it is broadcast without having a TV. No TV=no TV license. And the BBC is trying to expand its tax into this new medium.

          Actually the Google connection seems excessively tenuous; likely they'll just charge us £200 for the privilege of having a functioning internet connection.

          • BBC TV (Score:5, Insightful)

            by falconwolf (725481) <falconsoaring_2000@@@yahoo...com> on Monday May 04, 2009 @01:19PM (#27817837)

            The issue is that it is possible now to watch all of the BBC's programming on demand for a week after it is broadcast without having a TV. No TV=no TV license. And the BBC is trying to expand its tax into this new medium.

            The BBC can easily change that. They just don't upload their shows for free downloads. They can either charge for downloads or stop offering them.

            And I say that as an American who loves the BBC. I first got into it, and Pravda-Radio Moscow, in the '80 listening to them on shortwave.

            Falcon

            • by jabithew (1340853)

              If they did allow subscription or microtransactions, then that would allow them to open iPlayer more widely. But it would cause TV-licence rebellion here because we'd be paying for the content twice. They'd have to scrap the TV licence. Doesn't sound too bad, but if you try to explain the concept to a BBC employee they look at you as though you've suggested they shag a chicken.

        • by gilgongo (57446)

          The BBC don't need a business model. It's funded by licence fees.

          Unfortunately, the Beeb doesn't make nearly enough from the licence fee to fund the programming they make (and, some say, to attract the talent they need) - this is why they have to pursue licensing and merchandising deals for the likes of Dr Who and stuff.

    • Finalleee! (Score:3, Funny)

      by linhares (1241614)
      Taxes at your fingertips.

      Gotta love this digital age. for (x=0;xTotalPagesInDatabase;x++) {p:=IndexedPage[x]; if (p.domain=uk) p.pagerank=0;}

    • by drsquare (530038)

      If they're going to tax something, it may as well be parasitic industries like advertising and search engines. It definitely helps that they're foreign so we're not damaging any of our own industries.

    • Re: (Score:2, Funny)

      by piratesyarr (1117287)

      Don't tax me, bro!

  • by dmomo (256005) on Monday May 04, 2009 @11:39AM (#27816349) Homepage

    We love Google and we hate TAX. Dump their ruddy tea overboard!

  • This government is actually moronic enough to make me wish the Tories were in power.

    • by RobotRunAmok (595286) on Monday May 04, 2009 @11:51AM (#27816529)

      This government is actually moronic enough to make me wish the Tories were in power.

      On this side of the pond, I was fascinated recently to see the number of tax protests being organized by local elected Democrats. It suited the national media's agenda to portray the tax protests as some kind of right wing/redneck phenomenon, but it was clear to anyone on the ground that it cut across the whole political spectrum.

      • by JCSoRocks (1142053) on Monday May 04, 2009 @12:21PM (#27816939)
        The government needs to learn to live within its means. I love that a recession for everyone else means that the government just has to go looking for something else to tax. Well, sorry, that's not the way it works. We aren't making money and that's why you aren't getting any money yourself. So either take a pay cut, fire some of those useless sods that are just taking up space or figure out how to repair the economy. Taking more of our money is not an option.

        (Yes, I said, "our" money. What, you don't think Google will just increase advertising rates to compensate for the tax? You can't tax business. There's no such thing. The cost is always just passed down through the goods that are ultimately purchased by the consumer.)
        • by toQDuj (806112)

          I agree. The Government has been stupid enough to try to spend more and at the same time cut taxes. This implies that they have been spending your money and a little more on state projects (roads account for a large portion of that, and defense). Now they need to cash in on the check you gave them when you voted for their tax cuts.

          There is no such thing as a free lunch, so every bit of government spending must be regained in taxes. You can choose not to pay taxes, give up your citizenship and enjoy none of

          • Like I say above, deficit spending is the right thing to do during a recession; it's the unpopular step of raising taxes (pissing off the right) and lower spending (pissing off the left) during a boom that is politically more difficult.

            • by toQDuj (806112)

              The bad thing is that during the previous boom, they did not raise taxes but continued their deficit spending spree. Now the trouble bites.

        • The idea is to raise spending and lower taxes during a recession, take a deficit, and the lower spending and raise taxes during a boom. The problem is that the last couple administrations broke that rule by raising spending and lowering taxes during booms. I have to blame the right for this: they want all the populist cachet of always-lowering-taxes, but they don't have the balls to actually cut any programs.

          • Re: (Score:3, Interesting)

            by falconwolf (725481)

            The problem is that the last couple administrations broke that rule by raising spending and lowering taxes during booms.

            Yes, and one of those admins, the Clinton admin, shrunk the national deficit he inherited. The Laffer curve [wikipedia.org] illustrates that increasing taxes can actually reduce revenue not increase it. The lower taxes are the higher economic activity is which increases tax revenues.

            Falcon

        • The government needs to learn to live within its means. I love that a recession for everyone else means that the government just has to go looking for something else to tax. Well, sorry, that's not the way it works. We aren't making money and that's why you aren't getting any money yourself.

          Erm, RTFS -- the bit where it says "growth industry". I think you'll find that Google is making a pretty penny.

      • Re: (Score:3, Interesting)

        by pwizard2 (920421)
        Personally, I hope the tax protests are the first step in a revolution. Most people here in the US despise the way our government is going (big government, more bureaucracy, more waste, etc.) and we are sick of these politicians (People like Barney Frank and Pelosi especially come to mind) acting like all the money we make automatically belongs to them and that we are simply allowed to keep what is left over after they have taken what they want from us as tax. Government needs to be reminded that they serve
        • It's funny how in Arizona, Brewer was the target of the tax protests.

      • Re: (Score:2, Interesting)

        by cream wobbly (1102689)

        the whole political spectrum

        ...which in the US ranges from conservative to ultraconservative.

        Don't you ever dare tell a socialist that Obama somehow matches their political ideals.

      • Actually, I'm pretty sure Susan Roesgen is actually stupid enough to believe what she was saying.
  • Backfire? (Score:2, Interesting)

    by TTURabble (1164837)
    Couldn't Google et al just block the UK instead of paying the tax?
    I wonder what would happen if the entire island was unable to access any search engines.
    • by xgr3gx (1068984)
      Ha - Nice!
      How much is enough? Surely they're already taxed for data center/office real estate and utilities, income tax, and probably scores of other taxes that come with running a company with a global presence.
      But, since google is US based, most of those taxes probably go to the US gov't
      • Re: (Score:3, Interesting)

        by bennomatic (691188)
        Don't forget VAT. Any time you buy anything other than food, books, children's clothes, or a smattering of exempt items, you pay a "value added tax" of 15% over the base retail cost of the goods. And it's going up to 17.5% in the not too distant future.

        And I thought that California's sales tax was high...
        • Re: (Score:3, Interesting)

          by cream wobbly (1102689)

          That was a temporary cut to 15%. It's been 17.5% for a looooong time. There's also a 5% rate for domestic fuel, and a 0% rate for essential items such as food and children's clothing. 0% tax is different to tax-free.

          The minimum standard rate in the EU is 15%, so that's why VAT couldn't go any lower. The maximum allowed rate is 25%.

          Do try to keep up.

    • Re: (Score:3, Funny)

      by Jaysyn (203771)

      Hilarity ensues.

    • Re: (Score:3, Insightful)

      by wizardforce (1005805)

      Except that if Yahoo, MSN etc. are willing to pay the tax they'll gain lots of market-share.

    • Re: (Score:3, Insightful)

      by WCMI92 (592436)

      Couldn't Google et al just block the UK instead of paying the tax?
      I wonder what would happen if the entire island was unable to access any search engines.

      They could just shut down their UK specific service, leaving their users there with the option of google.com.

      This would put the UK government in the position of ordering websites that refuse to pay them taxes to be firewalled out of the country. Which would have the effect of cutting them off the internet completely.

    • Re:Backfire? (Score:5, Insightful)

      by zarthrag (650912) on Monday May 04, 2009 @11:59AM (#27816643)
      It won't go that far. Google will simply pass it on to UK advertisers. Google marches on - end of story.
      • Re: (Score:2, Insightful)

        by cream wobbly (1102689)

        End of story my arse. You haven't got a clue.

        Expect to see offshore advertising agencies sprout up if Google tries to do it that way. The agencies will be subject neither to the UK tax nor to Google's regional price hike.

        • by zarthrag (650912)
          (Tone that flame down, bud - it's just a hypothetical, and you're not THAT insightful.) What you suggest, could (at worst) just lead to yet another tax, and the dance starts over. At best, wouldn't those agencies have introduce a hike of their own? No one said prices have to double. Besides, Google could easily raise everything a penny everywhere and still not feel anything on their bottom line. My point is that Google is bigger than the UK.
  • This or doling out huge fines to boost revenue. Maybe every major corporation will pull the plug on their UK operations and let them feel what freemarket can do; I'm normally not the type to get bent out of shape over taxing companies (I even voted for Obama) but the UK is getting on my bad side; especially after the huge funding they've decided to dump into spying on the Internet. If they're really needing more money, they should cut massive spending projects that do nothing but violate privacy.
    • If they're really needing more money, they should cut massive spending projects that do nothing but violate privacy.

      Exactly. It seems that politicians are always under the impression that their citizens have all of this money just laying around and no idea how to use it. Fortunately for us they know exactly how our money would be better spent! Food? Rent? Don't be ridiculous! I'm going to buy you these nifty new CCTV cameras and then build an Internet activity tracking data warehouse. It'll be great! You'll wonder how you could have ever possibly lived without them before. Odd how projects like that march on regardless o

  • Source (Score:5, Insightful)

    by CodeArtisan (795142) on Monday May 04, 2009 @11:51AM (#27816521)
    The Daily Mail is a right wing (slightly upmarket) tabloid who attack the Labour government on a regular basis. While the idea of such a tax may or may not be true, you can be certain this particular newspaper will try to spin in in a manner that is comensurate with its Conservative politics.

    Of course, the current Government has given them plenty of ammunition, so it's quite possible that such an approach being considered. The source, however, can be compared to a news outlet such as Fox News.
  • Reality Check (Score:5, Informative)

    by mpk (10222) <mpk@uffish.net> on Monday May 04, 2009 @11:56AM (#27816585) Homepage

    * This is the Daily Mail - a notoriously unpleasant and right-wing newspaper which leaps at any chance to run "shock horror" stories about things like this even if they aren't actually necessarily 100% true, because it sells newspapers to their target market (right-wing anti-government types).

    * The Daily Mail doesn't like the BBC either.

    * "Ministers are considering" is generally code for "Someone suggested this in passing". It doesn't mean at all that there's any actual policy there or anything else. Hell, it might just mean someone talked to someone in the pub who suggested it in passing.

    In summary, take this story with a pinch of salt. It might become a more concrete proposal at some point in the future, but I think that'd be unlikely.

    • by jpmorgan (517966)

      It's still worth raising hell over, just in case someone does think it's a good idea. This is Labour we're talking about, a government notoriously fond of the shotgun approach to taxation.

      I for one, would rather not rely on the good intentions of politicians.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      I'm sure the Labour government lets leaks like this out on purpose to guage the media and public reaction. If it's ferocious enough they'll say "there were never any official plans for this anyway" and blame the newspapers. Otherwise they try and implement their dumb policies (won't even attempt to name them all, but I'm sure you know some of the few hundred I'm talking about).

    • by Sockatume (732728)
      Things ministers have "considered" and things the Daily Mail in particular reports they have considered [google.co.uk]. No point here, it's just interesting how often the term is used, especially when it's something controversial. Like science, it's never "John Smith", the newspapers preferring to imply that the entire profession says/thinks so.
      • That's exactly the secret of the Daily Mail hit-pieces, too. "Considering" is such a vague word, as is "ministers." What it could mean is that some little old lady from their constituency wrote a letter to their PM, the PM responded, politely, that they were "considering" their suggestion, and *boom*, the Daily Hate makes it sound like the legislation is on the way.

        For those who think this keeps the "gummint" in line: what if we did this to corporations. "Oil industry executives are considering using human

    • by Cathbard (954906)
      "Humphrey? Couldn't we divert the press's attention by leaking that idiot proposal to tax Google?"

      "Yes, Minister"

    • So, from the above comments, I take it that the Daily Mail is like the New York Times, except in the opposite direction?
  • by auric_dude (610172) on Monday May 04, 2009 @12:00PM (#27816651)
    Some would suggest that Google is avoiding paying taxes that are due to the UK exchequer http://www.guardian.co.uk/technology/2009/apr/20/google-uk-tax-avoidance [guardian.co.uk] so let them do no evil.
    • Re: (Score:3, Informative)

      by tcr (39109)

      Tax avoidance isn't evil, or even illegal. Evasion is a different issue.

  • Google does not display advertisements here due to adblock etc.
    So I don't have to pay if I were Brittish?
  • by NoNeeeed (157503) <slash@paulle a d e r . c o .uk> on Monday May 04, 2009 @12:14PM (#27816859) Homepage

    This is a story from the Daily Mail, a rag that makes Fox news look like quality journalism, a notorious hater of the BBC, and a supporter of the Conservative party (the current opposition).

    Also, the story is based almost entirely on quotes from a member of the opposition.

    So while I'm no fan of the current government (oh how I wish they would just give up and resign), this is almost certainly not what it appears.

    It is pretty common for civil servants to come up with a bunch of ideas, most of which fail the giggle test or a chucked out almost immediately, but are included to that they can say they considered the options thoroughly.

    This idea only just passes the giggle test and has probably been discounted, but is being revived by the opposition and the Daily Fail to help stir up their frothy-mouthed readers.

  • What kind of bizzaro-land is this, where the Conservatives are proposing new taxes? I thought that was strictly the realm of the Liberals!

  • by Bob9113 (14996) on Monday May 04, 2009 @12:57PM (#27817501) Homepage

    Why specify online advertising? Why not tax advertising in general?

    Advertising is hypothetically good because it increases the quality of information available to the consumer to make purchasing decisions. In practice, it typically does the opposite -- creating artificial demand -- particularly in industries like medicine and law where it is more difficult for the customer to be informed. It still serves a purpose, but it does have a negative external cost to society in reducing the quality of purchasing decisions. So, recapture that external cost the same way we recapture the external cost of pollution. A tax is a way to offset the negative externality.

    More simple option; just remove advertising from deductible expenses.

    See Also:
    http://en.wikipedia.org/wiki/Externality [wikipedia.org]

    Disclaimer: I work in the advertising industry, and a tax on advertising like I propose would actually hurt the company I work for. So, selfishly, I'd rather you ignore the rational basis for this post.

  • Is it just me, or do I get the funny feeling the UK will be nullrouted out of our existence Real Soon Now (tm) ?

    It seems like every day, they come up with a new, dumber idea that harkens back to the turn of the century... back when the UK actually mattered in the global political arena. Today they're just a funny little piece of history, stuck in the past and fighting the future.

    • by ydrol (626558)
      "our existence".. like no dumb stuff ever comes from anywhere else? Every Government in the world wants to tax the arse off the Internet. They are just trying to figure out how.
  • What would force Google into paying these taxes? All I could see is it pushing Google out of that area. It's not like the physical location of their servers affects connectivity (though, the UK's filtering plans might hurt)

    But, if Google just moves out of the UK (if they are even there at the moment) what would make them pay the tax at all? I'd move out just to show them how shortsighted and stupid they were...
  • by slapout (93640) on Monday May 04, 2009 @01:04PM (#27817603)

    One year from now. Somewhere in the UK.

    "I just googled for that new BBC show and got no hits..."

  • Dear UK,

    In the USA, one of our states, New Mexico, only allowed the sale of lottery tickets under provision that a portion goes to the local horse racers and horse tracks - can't lose that gambling money. In another, Texas, they're trying to tax satellite TV because it costs less than cable and that's just unfair.

    As soon as we heard that you're taxing Google to subsidize the BBC, your application was automatically generated and submitted to committee for review. Granted, you sort of fell through a logic l

  • I was wondering what took so long, the brits are best at what they do, and what they do is TAX!
    If I were to go over the history of taxation, you would see that for par, the brits hold the title for the most taxed items around....only to be outdone by the most creative taxing system, which falls unto New York State, for having a tax for fuel inefficiency AND for fuel efficiency...

    ie- if you have a smart car and DONT use up gas, we have to tax you....!!!!

    I tend to wonder, why Google though, or is this a searc

  • For the unenlightened the Daily Mail is about as reliable and non-partisan as the National Enquirer. Stories from them should be filtered at source.
  • by Budenny (888916) on Monday May 04, 2009 @01:46PM (#27818287)

    The way the BBC is funded is magnificent and the envy of the world. You can see this from the awed comments here and in other places. That said, like all magnificent things, it is still capable of improvements, and we in New Labour are always anxious to improve life in Britain. We usually do this by thinking things through.

    In the present case, we notice that the way the BBC is funded is that everyone who watches any sort of TV, whether he or she watches the BBC or not, is obliged under penalty of fines and jail to subscribe to the BBC. This as we say is magnificent and the envy of the world. We understand that the US is considering the same way of funding GM. Anyone who buys a car will be obliged to donate a sum, probably 10% or so of the value of their purchase, to GM, whether they buy a GM car or not. But we digress. Well actually the same model is under consideration in Belgium, where Del Haize is to get a contribution from everyone who wants to buy groceries, which will be most people. We must move on though. But first can we just say that everyone is doing this, we lead the world, they are all following our example.

    Anyway, great as the BBC and its funding model are, after long thought, we realize that yes, we can do better. How?

    Well, the BBC operates web sites. Clearly, anyone who uses any sort of web site should be obliged to subscribe, or at least pay something, to the BBC. Therefore, we are going to have a tax on Internet use, some or all of whose proceeds will go to the BBC, for it to operate its public service web sites.

    Do you see now how reasonable this is? That's good, we thought you would.

Take care of the luxuries and the necessities will take care of themselves. -- Lazarus Long

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