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EU Government

France Considers Raising Taxes on Internet Giants (reuters.com) 302

Posted by EditorDavid from the French-revolutions dept.
France's Finance Minister has drafted a new law to tax internet giants, reports Reuters: A three percent tax on the French revenue of large internet companies could yield 500 million euros [$568 million U.S. dollars or £429 million] per year, French Finance Minister Bruno Le Maire said on Sunday. Le Maire told Le Parisien newspaper the tax is aimed at companies with worldwide digital revenue of at least 750 million and French revenue of more than 25 million euros.

He said the tax would target some 30 companies, mostly American, but also Chinese, German, Spanish and British, as well as one French firm and several firms with French origins that have been bought by foreign companies. The paper listed Google, Amazon, Facebook and Apple (the four so-called "GAFA" companies) but also Uber, Airbnb, Booking and French online advertising specialist Criteo as targets. "A taxation system for the 21st century has to built on what has value today, and that is data," Le Maire said. He added it is also a matter of fiscal justice, as the digital giants pay some 14 percentage points less tax than European small-and-medium sized companies.
The draft law will be presented to the cabinet on Wednesday, and then presented to France's parliament, Reuters reports.

"The tax would also target the sales of personal data for advertising purposes."
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France Considers Raising Taxes on Internet Giants More

France Considers Raising Taxes on Internet Giants

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  • All needed to be known (Score:5, Informative)

    by Anonymous Coward on Monday March 04, 2019 @12:41AM (#58211064)

    "He added it is also a matter of fiscal justice, as the digital giants pay some 14 percentage points less tax than European small-and-medium sized companies."

  • Magic free money (Score:4, Informative)

    by Papaspud ( 2562773 ) on Monday March 04, 2019 @12:51AM (#58211100)
    I'm sure they won't just add that 3 % back to the costs of their services in France, nope that money will just magically appear.

    • Re:Magic free money (Score:5, Informative)

      by Mr. Dollar Ton ( 5495648 ) on Monday March 04, 2019 @02:03AM (#58211254)

      They won't because they can't. Here's an explainer, with TL;DR section.

      https://www.cs.cmu.edu/~ref/ec... [cmu.edu]

      • You can only "just raise prices" to whatever you want if you have a monopoly on a necessity.

        If the digital giants have no competition for their respective products, it may not be a necessity, but it's pretty much a monopoly.

        • Re: Magic free money (Score:3, Insightful)

          by Anonymous Coward

          If they could raise prices 3% with no consequences, they would have already done it. That's a given. So no, they will not simply raise prices. It may change the optimal price/volume point, and so indirectly change prices (which could be up or down, if they want to claw back profits by volume, they may reduce prices).

          • Re: (Score:3)

            by tomhath ( 637240 )

            If they could raise prices 3% with no consequences, they would have already done it.

            The reason they can't raise prices without consequences is because of a thing called "competition". Yes, the giants don't have much competition, but their current price points are where each can compete best against the other giants. If everyone in the market gets hit with a 3% tax they can all adjust prices up 3% without consequences.

            But wait, what if one doesn't raise prices? Wouldn't that give them a competitive advantage? No, because if that was true they would already have cut their prices.

            • Re: (Score:2)

              by HiThere ( 15173 )

              However, there's a question as to whether the price increase would be enough to offset the network effects benefiting the "giants". For every environment there's an optimal size, and this might be sufficient to favor smaller companies. Perhaps. (That's not the way to bet...but it's a possibility.)

        • Re:Magic free money (Score:5, Insightful)

          by Mr. Dollar Ton ( 5495648 ) on Monday March 04, 2019 @03:51AM (#58211518)

          You fail to consider the market for FB services. It is not what the users are *paying*, it is what advertisers are. It is business oriented, so the elasticity of demand and the power to negotiate is significantly better than what a consumer has. So, believe me, nothing close to full passing of the tax is even close to happening. And since the amount is not even all that big, it ain't getting passed on the consumer at all.

          Not to mention that if a service is a monopoly, then regulation should not be optional, but mandatory. Monopolies are always bad.

      • You're assuming the goal of a business is to maintain their pre-tax revenue and sales. It's not. It's to maximize their profit (profit = revenue - costs). So yes passing the tax on to customers will decrease demand (fewer unit sales). But from a profit perspective, it is usually preferable for the company to pass the tax on rather than simply eating it. The obvious example is if the seller currently only has a 2% profit margin, and you impose a 3% revenue tax on them. Obviously they're not going to ea

        • Re: (Score:3, Insightful)

          by Mr. Dollar Ton ( 5495648 )

          But from a profit perspective, it is usually preferable for the company to pass the tax on rather than simply eating it.

          Their problem is they cannot do it, for reasons the explainer made clear, which shows that you have not read it.

          The obvious example is if the seller currently only has a 2% profit margin, and you impose a 3% revenue tax on them. Obviously they're not going to eat the tax since that would mean they'll be losing money with each sale. The only way they can continue to sell and stay in busine

          • Re: (Score:2)

            by mpercy ( 1085347 )

            The CBO produced a report "THE INCIDENCE OF THE CORPORATE INCOME TAX" in which it states

            "A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but that money must come from somewhere: from reduced returns to investors in the company, lower wages to its workers, or higher prices that consumers pay for the products the company produces."

            And it goes on to say

            "Although economists are far from a consensus about exactly who bears how much of the burden of the c

            • Re: (Score:3)

              by HiThere ( 15173 )

              One thing, however, is that you're considering all the corporations involved to be public goods. In France, at least, many consider foreign influences to be the opposite of a public good. And, personally, I consider Facebook to be such even without invoking national benefit.

              So perhaps the point of this tax it to encourage local business to succeed. Doing it with a tax rather than as a tax-break will generally raise a lot less public opposition. And they may consider that if some of those "giants" just d

    • Re:Magic free money (Score:5, Funny)

      by phantomfive ( 622387 ) on Monday March 04, 2019 @02:57AM (#58211388) Journal

      I'm sure they won't just add that 3 % back to the costs of their services in France

      So.....advertisers will pay more? Tell me, where is the drawback again?

    • No magic. 3% of GAFA et. al.'s profits in France would decline. How difficult is that to understand? And their profits are so obscene that they can afford to lobby the US govt. (and others) into letting them do whatever they want. I, for one, would like to see 3% less of that.

  • Sounds like a splendid idea! Let France lead the way by laying a _heavy_ tax on data hoarders. The more data they hoard, and the more rapey their data collection scams, the higher their taxes!

  • Yup. (Score:2, Troll)

    by WindBourne ( 631190 )
    Not earning enough from the massive penalties (5-10x what Europe fines European companies, when they do go after them) that Europe charges the Internet Giants.
    The real problem is that we are not taxing the Sales over the internet properly, combined with nations (such as Ireland) that does not charge corporate taxes. To be fair, I would rather that America moves to 0% tax if the company is here (and is doing the bulk of the work here), otherwise a simple 25% tax on them.

    It is long past time for the west

  • I am sorry to say this, but France is a champion of tax burden. Those gilets jaunes are a symptom this failure. I'll blame this lack of income on the rigid job creation/destruction over-regulation.

  • Fair, but... (Score:4, Interesting)

    by bradley13 ( 1118935 ) on Monday March 04, 2019 @05:55AM (#58211752) Homepage

    In all fairness, this should have nothing to do with the Internet giants. Given the massive degree of internationalization today, *all* companies should be taxed where they generate their revenue, rather than allowing stupid games with tax havens.

    That said, what France is doing is borderline corrupt: targetting specific companies that (they think) represent untapped sources of sweet, sweet tax money. France is basically broke, attempts to further tax the populace led to the yellow-vests, and cutting bureaucracy or public services is politically impossible. They need more bread and circuses to stave off the collapse...

    • Tax havens work precisely by allowing corporations to determine where their revenues are generated.

      In simplest form, a company might manufacture their product at almost zero profit in China, sell to a subsiduary in Ireland, have that subsiduary mark the price up and sell on to a subsituary in the US, and then the US company sell the product retail at almost no profit. This the revenue is generated in a jurisdiction with favorable tax conditions - at least on paper.

      You could try to stop that by charging tax

      • Now what happens when you bring that money into the US to pay the shareholders, or to use to pay employees? Taxation. Your overseas income is tax deferred - not tax exempt. The second it hits US shores, it's taxed.

        • There are plenty of ways around that too. Easiest one? Don't bring it in. If you have only a few shareholders, you can just keep it overseas. But, if you do want it back in the US... get a loan. A huge loan. Secured upon the money you are not bringing into the US. As you have perfectly secure collateral, in liquid assets no less, you can take out your huge loan with a very low interest rate. There will be some cost, of course, but less than if you were to pay tax. It does look a bit iffy in accounting havin

          • Hurray! You just suggested a solution (loan against foreign assets) that is illegal [kattenlaw.com]. The IRS will consider that as taxable income. That loophole leads to a nice cozy jail cell...

    • Re:Fair, but... (Score:4, Insightful)

      by AmiMoJo ( 196126 ) on Monday March 04, 2019 @09:56AM (#58212442) Homepage Journal

      Nothing corrupt about noticing that a bunch of companies are all pulling the same tax-dodge and trying to do something about it.

  • revenue taxing - finally (Score:5, Insightful)

    by Tom ( 822 ) on Monday March 04, 2019 @06:38AM (#58211822) Homepage Journal

    The key word is not "3%" nor is it "Internet giants" - the key word is revenue.

    This is what should've happened a decade ago. Taxing revenue instead of profits puts a clean shot right between the eyes of the majority of tax evasion schemes. It's a step long overdue.

    And before the typical neo-conservative trolls shout it down: Remember that everyone BUT corporations is taxed by revenue, not profits. My income tax is based on my income, not on what's left at the end of the month. And so is yours. If we can survive that type of taxation, so can multinational corporations.

    • Re: (Score:2)

      by Hodr ( 219920 )

      That's a false equivalence and it's amazing you found 4 idiots with mod points to support you.

      You are claiming that personal taxes have no exemptions for costs. If you itemize you basically turn that income number into a profit number by removing your expenses (travel, tools, work materials, costs). If you rent your house or sell your guitar or anything you deduct the cost. Even if you can work from home and have zero costs whatsoever, meaning your income is 100% profit, you are still given a "standard de

      • Re: (Score:2)

        by Tom ( 822 )

        I can't deduct my rent. Maybe in your country you can. Over here, deductions are only possible for things directly related to your job, and a very small number of extras.

    • Remember that everyone BUT corporations is taxed by revenue, not profits.

      What, no Standard Deduction or Itemized Deductions where you live? Which, at least theoretically (yah, it's been a very long time since any attempt was made to update those deductions) is meant to allow for the costs of actually, you know, living and paying your bills.

      In other words, no you're taxed on income over and above cost of living (again, it's been a very long time since they adjusted the Standard Deductions and such to actu

      • Remember that everyone BUT corporations is taxed by revenue, not profits.

        What, no Standard Deduction or Itemized Deductions where you live? Which, at least theoretically (yah, it's been a very long time since any attempt was made to update those deductions) is meant to allow for the costs of actually, you know, living and paying your bills.

        In other words, no you're taxed on income over and above cost of living (again, it's been a very long time since they adjusted the Standard Deductions and such to actually match a "normal" cost of living for taxpayer and family) - in other words on profit....

        By a "very long time" do you mean the 2017 tax legislation when the personal exemption was eliminated and the standard deduction nearly doubled? 2 years isn't a "very long time" when talking about tax policy, it is only 2 tax cycles for individuals. The change was passed in 2017 but it went into effect for the 2018 tax year so it's really only 1 year since the change happened. Prior to that, the standard deduction hadn't changed since 2017, when it went from $6,300 to $6,350. You have to dig REALLY deep

      • Re: (Score:2)

        by Tom ( 822 )

        Can't speak about your country, but mine is very, very, very far away from allowing actual cost of living to be deductible. The deductions include those expenses made in direct relation to the job, i.e. commuting costs, application costs for a new job and a small number of additionals.

        Nowhere can I deduct my mortgage payment, my electricity bill or my food.

        Comparing standard deductions with the profit-margin-only taxation of corporations is not a thing here. If you can deduct your mortgage, let me know, I m

    • If we can survive that type of taxation, so can multinational corporations.

      Yeah, they'll raise prices 3%. As long as it's an across-the-board tax there's no competitive advantage to not do so.

      Congratulations, you just raised taxes on the middle class again - as always.

      • Re: (Score:2)

        by Tom ( 822 )

        Yeah, they'll raise prices 3%

        Contrary to anything else that gives them an excuse to raise prices, this price raise at least will cycle around to the society. Also, a company that decides to absorb this tax without raising the prices - for example by not paying lawyers lots of money to come up with tax evasion schemes - will have a competitive advantage.

        The whole point is that this is a tax that stays within the country where the business is made. Name one other way to ensure this.

    • Taxing revenue is about the stupidest thing you can do. It's the surest way to kill companies. Don't care if you make profit or not, Government wants a cut of the action. Will Government chip in to cover costs when there is a loss on the books? No? Then why does it get to claim a piece of revenue when that loss happens?

      • Re: (Score:2)

        by Tom ( 822 )

        It's the surest way to kill companies.

        [citation required]

        Will Government chip in to cover costs when there is a loss on the books? No? Then why does it get to claim a piece of revenue when that loss happens?

        Like I said: Income tax works that way. My income is taxed based on revenue. And no, if I can't make it and end the month spending more than I made, the government doesn't chip in.

        Also: Yes, the government does regularily step in to prop up companies. It saved most of the banks during the financial crisis, it hands out subsidies to industries that are critical to society but not very profitable, it has a multitude of sponsorship and financial support programs running and many more ways in

        • Here you go [taxfoundation.org]. Seriously, do you think it's a good idea to tax a company when they don't even make a profit? You're a new startup, you have $250,000 in expenses, you made $200,000 in revenue, meaning a gross loss of $50,000 (and an even greater net loss, most assuredly). AND you get to pay a nice tax on that $200,000 in revenue.

          Your income tax is NOT based that way. You have deductions, don't you? If you have negative income throughout the year - you don't pay income taxes. If you earned $5,000 - well

    • And before the typical neo-conservative trolls shout it down: Remember that everyone BUT corporations is taxed by revenue, not profits. My income tax is based on my income, not on what's left at the end of the month. And so is yours. If we can survive that type of taxation, so can multinational corporations.

      Typical conservative troll here, lol (possibly paleo instead of neo though)

      Several things to take issue with here.

      Income isn't the only tax, for one thing, individual capital gains are taxed only on gain, for example. (I won't say profit, as I don't think you get to account for inflation.)

      For another, it's questionable whether corporations should be taxed at all. Their employees are taxed on income, and their investors/owners are taxed on profits. Just how many places on this highway are you going to eng

  • Dear Government,

    we all know that the big IT companies do not pay taxes in the EU, as some countries (e.g., Ireland, the Netherlands, Germany) do not really try to tax them, look the other way when they avoid taxes etc. I know that Germany is afraid someone (the US) could start taxing German cars, but:

    (a) the car industry is only 4.5% of Germans GDP.
    (b) they are ignoring modern trends for decades now, they had it coming and they need to change. The US taxing them could actually help.
    (c) we can easily make up

  • Raise taxes but they won't pay (Score:3)

    by WCMI92 ( 592436 ) on Monday March 04, 2019 @10:05AM (#58212478) Homepage

    Google. etc don't pay taxes. That is what they do. Governments can raise taxes to 9,000% it doesn't matter to them they won't pay.

  • "France Considers Raising Taxes"

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