5 ms·

France plans 'Google tax' on Internet searches

20 points by mtkd 17y ago

karzeem 17y ago
The core problem with this scheme is one that's endemic to this sort of legislation. It's a basic assumption that economic interactions are all ultimately zero-sum, which is simply untrue. The idea that Google (or anyone else) must necessarily derive its success from somehow, somewhere screwing people denies the fact that the healthiest economies are packed with non-zero-sum interactions.
- mtkd 17y ago
  In Europe there is, due to the falling tax revenues, a debate about who should now carry the burden - which is temporarily being placed on high earners but that will ultimately reduce revenues even further as they flee to more accommodating jurisdictions. It is an anomaly (in European eyes) that the most profitable businesses, particularly overseas technology businesses, are paying little or no tax currently. I suspect these companies are going to become a target for tax on both sides of the Atlantic over the next two years as governments try to reduce deficits - there are not many other sectors making profit right now.
- joubert 17y ago
  Taxation is also a tool to shape behavior.
  - cwan 17y ago
    Not sure how this relates to what karzeem has said. You're right, taxation can shape behaviour. So what do you suppose it's saying here? Let's tax and discourage a productive part of society - or at least a part that helps people get things done faster to subsidize an industry (that's already being protected and promoted by government) that people are not interested in enough to actually support with their own money? Let's also not forget Quaero that the French tried to create as a counterbalance to supposedly American centric search for a total estimated amount of 293M Euros over 5 years! If the French government was that concerned about certain favored industries, why not just put their money there?
    - joubert 17y ago
      I simply said that because he said the motivation from this proposed tax stems from the misbelief of the zero sum game in wealth creation. However, from the article it seems it is more a way to to stimulate certain behavior (i.e. cultural developments).
fleitz 17y ago
This will lead the way so they can start taxing BMW and Mercedes to revive buggy whip manufacturing. Truly visionary.
- aarongough 17y ago
  Haha, very much along the lines of what I was thinking. Isn't the idea behind capitalism that good businesses succeed, while bad businesses fail? What happens when all of the bad businesses are propped up by government subsidies? ^sigh^ whatever happened to letting the market decide...
  - jonny_noog 17y ago
    ^sigh^ whatever happened to letting the market decide... It was realised that it was not the most effective method to maintain profits for those established individuals and organisations that have the clout to influence government policy. Let's hope that one day this changes, but I'm not holding my breath.
  - onewland 17y ago
    I don't think we ever let the market decide EVERYTHING. See: airlines, military contractors, banks (before this crisis as well). I'm not even sure we're in a period where this is more pervasive than usual. That said, I agree that in 99% of cases corporate welfare is a terrible idea.
  - joubert 17y ago
    The tax is to be levied irrespective of the (major) search engine used.
    - aarongough 17y ago
      But the money is still being used to prop up a market that cannot support itself. If it was a vital service (like maybe a utility service) then I could understand. But we are talking about the music industry!
tjic 17y ago
I'm constantly amazed that France's economy is as good as it is, given how much they love shooting themselves in the foot.
- barrkel 17y ago
  Indeed. Most of the US's growth in GDP versus say the Euro 15 countries for the past while has come from population growth. On a per-capita basis, the US doesn't seem to be reaping much of the supposed benefit of its allegedly pro-business system, though as you can tell I think there's a lot of meddling in the US system too, with what appears to be legalized bribery of government under a different name. A blogger for The Economist had an interesting article today: http://www.economist.com/blogs/democracyinamerica/2010/01_0 http://www.economist.com/blogs/democracyinamerica/2010/01_0 (On HN here: http://news.ycombinator.com/item?id=1038226 http://news.ycombinator.com/item?id=1038226 )
- joubert 17y ago
  France's productivity per capita is, if not the highest in the world, in the top 3.
bokchoi 17y ago
The president is said to have been made keenly aware of the problems illegal downloads pose musicians by his supermodel-turned-singer wife, Carla Bruni-Sarkozy. This may explain why the French first lady's producer, Patrick Zelnik, was tasked with leading the commission, which came up with the proposals. Wow, no conflict of interest there.
- deleted 17y ago
  [deleted]
joubert 17y ago
Aren't they just simply proposing to tax online advertising revenue? What's the big deal?
- aarongough 17y ago
  The big deal is that they're planning on using the money generated to support creative industries that are harmed by digital innovation. ie, the music industry.
  - joubert 17y ago
    But the music industry gets taxed on their revenue, no? If so, shouldn't the search engines be taxed on their advertising revenues?
    - aarongough 17y ago
      As per the comment above: they are already taxed on their advertising revenue.
      - joubert 17y ago
        But they don't get taxed in the jurisdiction where the revenue originates (as and when the user clicks on the ad).
        aarongough 17y ago
        Exactly the same way that if Amazon sells a product to someone in Africa, from their USA based website, Amazon do not have to pay taxes on that revenue in Africa.
        joubert 17y ago
        The origination of revenue concept, residency, etc. in tax law is continuously being tested, both by governments and by companies, in a tug of war. Consider this case of affiliate advertising (which, although different in specifics from the French case, has the same tone and a similar legal path): http://venturebeat.com/2009/04/24/california’s-proposed-“amazon-tax-–-bad-for-california/ http://venturebeat.com/2009/04/24/california’s-proposed-“ama... In particular, this bit: "Here’s how it would work: If you have a web-based business in California and collect revenue by showing out-of-state companies’ ads on your site, Bill AB178 will claim that both you and the businesses you advertise on your site have residence in California, and are therefore required to pay California sales tax. For example, say your Santa Monica-based web site shows banner ads for Amazon.com. With Bill AB178 in place, Amazon.com would be classified as a California-based business based on the fact that your business draws affiliate advertising sales revenue. Amazon would then be required to collect sales tax on all sales into California. The idea behind the bill is that California could force out-of-state retailers to collect and pay California sales taxes." You can also read more about it here: http://www.amazon.com/gp/help/customer/display.html?nodeId=468512 http://www.amazon.com/gp/help/customer/display.html?nodeId=4...
alain 17y ago
Also in France we have a tax on CD-R, DVD-R, hard drives, mp3 players which is given to the music companies to compensate their losses from pirating (you pay that tax whether you pirate or not. And still haven't the right to pirate after paying it). The ISP also give 1% of their income to those companies. So yes I think taxing the search engines is the logical next step.
- aarongough 17y ago
  Wow. I remember reading something about that a while ago but I didn't realize it was that bad... The next logical step is that the government forces you to listen to 4 hours of music a day, and pay for it, so that flagging creative industries are supported...
wendroid 17y ago
This is a very interesting subject. Countries in the EU have competed to provide a better business environment to foreign companies. Eire has gone for the 10% corporation tax break. Other EU countries are threatening the companies with sanction. Witness the recent story concerning Google's UK tax bill: http://www.timesonline.co.uk/tol/news/uk/article6122329.ece http://www.timesonline.co.uk/tol/news/uk/article6122329.ece Google avoids £100m UK tax "The website hailed as a ‘paragon’ is accused of adding to the public’s burden." Google's advertising first, then Facebook's (er, pardon - Livre de Visage's), then Reddit's (LuLui's) self service ads. To then dish it out to non-profitable ventures is astonishing, it's like the levy I had to pay on C60 tapes to save my programs, or the levy in some countries on blank CDs and DVDs that goes into the publishing pot. Then again, I get money from the Lottery Fund and I've never bought a ticket so I should shut up :)

20 points by mtkd 17y ago

The core problem with this scheme is one that's endemic to this sort of legislation. It's a basic assumption that economic interactions are all ultimately zero-sum, which is simply untrue. The idea that Google (or anyone else) must necessarily derive its success from somehow, somewhere screwing people denies the fact that the healthiest economies are packed with non-zero-sum interactions.

mtkd 17y ago
In Europe there is, due to the falling tax revenues, a debate about who should now carry the burden - which is temporarily being placed on high earners but that will ultimately reduce revenues even further as they flee to more accommodating jurisdictions. It is an anomaly (in European eyes) that the most profitable businesses, particularly overseas technology businesses, are paying little or no tax currently. I suspect these companies are going to become a target for tax on both sides of the Atlantic over the next two years as governments try to reduce deficits - there are not many other sectors making profit right now.
joubert 17y ago
Taxation is also a tool to shape behavior.
- cwan 17y ago
  Not sure how this relates to what karzeem has said. You're right, taxation can shape behaviour. So what do you suppose it's saying here? Let's tax and discourage a productive part of society - or at least a part that helps people get things done faster to subsidize an industry (that's already being protected and promoted by government) that people are not interested in enough to actually support with their own money? Let's also not forget Quaero that the French tried to create as a counterbalance to supposedly American centric search for a total estimated amount of 293M Euros over 5 years! If the French government was that concerned about certain favored industries, why not just put their money there?
  - joubert 17y ago
    I simply said that because he said the motivation from this proposed tax stems from the misbelief of the zero sum game in wealth creation. However, from the article it seems it is more a way to to stimulate certain behavior (i.e. cultural developments).

fleitz 17y ago

This will lead the way so they can start taxing BMW and Mercedes to revive buggy whip manufacturing. Truly visionary.

aarongough 17y ago
Haha, very much along the lines of what I was thinking. Isn't the idea behind capitalism that good businesses succeed, while bad businesses fail? What happens when all of the bad businesses are propped up by government subsidies? ^sigh^ whatever happened to letting the market decide...
- jonny_noog 17y ago
  ^sigh^ whatever happened to letting the market decide... It was realised that it was not the most effective method to maintain profits for those established individuals and organisations that have the clout to influence government policy. Let's hope that one day this changes, but I'm not holding my breath.
- onewland 17y ago
  I don't think we ever let the market decide EVERYTHING. See: airlines, military contractors, banks (before this crisis as well). I'm not even sure we're in a period where this is more pervasive than usual. That said, I agree that in 99% of cases corporate welfare is a terrible idea.
- joubert 17y ago
  The tax is to be levied irrespective of the (major) search engine used.
  - aarongough 17y ago
    But the money is still being used to prop up a market that cannot support itself. If it was a vital service (like maybe a utility service) then I could understand. But we are talking about the music industry!

tjic 17y ago

I'm constantly amazed that France's economy is as good as it is, given how much they love shooting themselves in the foot.

barrkel 17y ago
Indeed. Most of the US's growth in GDP versus say the Euro 15 countries for the past while has come from population growth. On a per-capita basis, the US doesn't seem to be reaping much of the supposed benefit of its allegedly pro-business system, though as you can tell I think there's a lot of meddling in the US system too, with what appears to be legalized bribery of government under a different name. A blogger for The Economist had an interesting article today: http://www.economist.com/blogs/democracyinamerica/2010/01_0 http://www.economist.com/blogs/democracyinamerica/2010/01_0 (On HN here: http://news.ycombinator.com/item?id=1038226 http://news.ycombinator.com/item?id=1038226 )
joubert 17y ago
France's productivity per capita is, if not the highest in the world, in the top 3.

bokchoi 17y ago

The president is said to have been made keenly aware of the problems illegal downloads pose musicians by his supermodel-turned-singer wife, Carla Bruni-Sarkozy. This may explain why the French first lady's producer, Patrick Zelnik, was tasked with leading the commission, which came up with the proposals. Wow, no conflict of interest there.

deleted 17y ago
[deleted]

joubert 17y ago

Aren't they just simply proposing to tax online advertising revenue? What's the big deal?

aarongough 17y ago
The big deal is that they're planning on using the money generated to support creative industries that are harmed by digital innovation. ie, the music industry.
- joubert 17y ago
  But the music industry gets taxed on their revenue, no? If so, shouldn't the search engines be taxed on their advertising revenues?
  - aarongough 17y ago
    As per the comment above: they are already taxed on their advertising revenue.
    - joubert 17y ago
      But they don't get taxed in the jurisdiction where the revenue originates (as and when the user clicks on the ad).
      - aarongough 17y ago
        Exactly the same way that if Amazon sells a product to someone in Africa, from their USA based website, Amazon do not have to pay taxes on that revenue in Africa.
        joubert 17y ago
        The origination of revenue concept, residency, etc. in tax law is continuously being tested, both by governments and by companies, in a tug of war. Consider this case of affiliate advertising (which, although different in specifics from the French case, has the same tone and a similar legal path): http://venturebeat.com/2009/04/24/california’s-proposed-“amazon-tax-–-bad-for-california/ http://venturebeat.com/2009/04/24/california’s-proposed-“ama... In particular, this bit: "Here’s how it would work: If you have a web-based business in California and collect revenue by showing out-of-state companies’ ads on your site, Bill AB178 will claim that both you and the businesses you advertise on your site have residence in California, and are therefore required to pay California sales tax. For example, say your Santa Monica-based web site shows banner ads for Amazon.com. With Bill AB178 in place, Amazon.com would be classified as a California-based business based on the fact that your business draws affiliate advertising sales revenue. Amazon would then be required to collect sales tax on all sales into California. The idea behind the bill is that California could force out-of-state retailers to collect and pay California sales taxes." You can also read more about it here: http://www.amazon.com/gp/help/customer/display.html?nodeId=468512 http://www.amazon.com/gp/help/customer/display.html?nodeId=4...

alain 17y ago

Also in France we have a tax on CD-R, DVD-R, hard drives, mp3 players which is given to the music companies to compensate their losses from pirating (you pay that tax whether you pirate or not. And still haven't the right to pirate after paying it). The ISP also give 1% of their income to those companies. So yes I think taxing the search engines is the logical next step.

aarongough 17y ago
Wow. I remember reading something about that a while ago but I didn't realize it was that bad... The next logical step is that the government forces you to listen to 4 hours of music a day, and pay for it, so that flagging creative industries are supported...

wendroid 17y ago

This is a very interesting subject. Countries in the EU have competed to provide a better business environment to foreign companies. Eire has gone for the 10% corporation tax break. Other EU countries are threatening the companies with sanction. Witness the recent story concerning Google's UK tax bill: http://www.timesonline.co.uk/tol/news/uk/article6122329.ece http://www.timesonline.co.uk/tol/news/uk/article6122329.ece Google avoids £100m UK tax "The website hailed as a ‘paragon’ is accused of adding to the public’s burden." Google's advertising first, then Facebook's (er, pardon - Livre de Visage's), then Reddit's (LuLui's) self service ads. To then dish it out to non-profitable ventures is astonishing, it's like the levy I had to pay on C60 tapes to save my programs, or the levy in some countries on blank CDs and DVDs that goes into the publishing pot. Then again, I get money from the Lottery Fund and I've never bought a ticket so I should shut up :)