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Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of
by jfasi 9y ago
Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of my favorite points:
* It's done on revenues and not profits. This avoids the impossible question of where profits are realized: if you make money in one country but displace that earning by costs somewhere else, it's practically impossible to determine where the tax should go.
* It's uniform across the EU and so it doesn't incentivize companies to base themselves in any member over another. This avoids the distortion we have now with Ireland's permissive tax system siphoning up all the company headquarters and with it the (scanty) tax revenue.
* Each member receives money based on the number of users they have in their own country, meaning they have a strong incentive to increase usage of digital services and a disincentive to put in place regulatory measures that would decrease adoption and harm growth.
One of the problems of the current situation is that it sets tech companies up as these parasitic monsters that creep into a country, make huge profits, alter the society as they see fit, and give nothing in return. The best thing about this proposal is that it sets up a harmonious relationship: governments get to make money while companies get to have their access to citizens legitimized. With that legitimacy comes better PR and a seat at the table as legal systems everywhere catch up to the world tech companies have created.
Plus it might finally put that ridiculous "tech companies are tax evaders" meme to rest.
- adventured 9y ago> The best thing about this proposal is that it sets up a harmonious relationship It does the exact opposite. It spurs a further acrimonious relationship between the major economies of the EU and the US. Particularly France and Germany, which are a combined outsized share of the EU economy and represent ~80% of the trade deficit that the US has with the EU. This new tariff exists solely because the EU can't compete on technology and needs to raise barriers. It's the same reason any country chooses to implement lopsided tariffs, as a shield from competition. It encourages the US to figure out how to retaliate for a new tariff that was designed to almost exclusively target US tech companies. The US will have no choice but to respond with something equally punitive on EU imports. That'll just make relations between the EU and US worse.
- _fizz_buzz_ 9y agoIt's not a tariff. EU companies are treated the same.
- throwaway77384 9y agoWhat you are describing are Trump's steel tariffs, which indeed make no sense and do exactly what you say. I believe what the EU has realised, is, that trying to tax the profits of corporations that will simply move them around and declare them wherever they don't have to pay taxes on them, is a game of cat and mouse the EU can't win. So, they decided to go a different route. When Google decided they could negotiate the tax they had to pay in the UK with George Osborne, the public outcry was massive (think: "Why can't I get an appointment with HMRC to negotiate what I owe in taxes?"). The EU needs to show that the social contract is non-negotiable, lest it face further disenfranchisement of the populace. This is a good first step in the right direction, in my opinion. Whether it's tech companies, or any other big industrial conglomerate, tax avoidance is not acceptable.
- wtfstatists 9y ago> The EU needs to show that the social contract is non-negotiable, By raising new consumption tax ? Its not going to work. Thats not how you fund socialism lol.
- zerostar07 9y ago> Personally, I like this proposal It is meant to be a popular proposal that will win lots of likes for the EU, but it's stupid on the face of it and it will end up comically abused. E.g. companies could create 2 resellers across europe, split the revenue and avoid the tax. It's not less brazen than their current dodging schemes and it just shows the impossibility of taxation under global free trade. It's also very passive aggressive, if they wanted a tariff they should impose a tarriff.
- clishem 9y ago> The commission’s planned revenue tax, which is expected to be proposed on March 21, would only represent a targeted, short-term solution. It seems to be targeted at big tech giants specifically. Good luck splitting Alphabet, Facebook and Apple. > the impossibility of taxation under global free trade They wish.
- jfasi 9y ago> companies could create 2 resellers across europe, split the revenue and avoid the tax That's exactly the point of taxing revenue: under a profit-based taxation scheme you'd end up with a net profit of zero. Revenue taxation schemes would double-tax this setup.
- zerostar07 9y agobut if the revenue is below the limit, they wont be taxed, and i guess they can play that cat and mouse game forever.
- anonymouz 9y agoThey would be just begging for the limit to be removed then though. Like the current 'tax optimization' schemes have given rise to this proposal.
- zerostar07 9y agoso how is this an improvement then
- 3pt14159 9y agoI have yet to talk to someone that can explain to me why a VAT wouldn't be better. We already know how VATs work, they're already fair, they already handle low-margin companies very well. Why bother with a revenue tax? It heavily stilts the game in favour of bigger players because it encourages vertical integration. I agree that our largest tech companies are already too powerful and need to have a higher tax burden to compensate for the warping effect they have on the world, but that's more easily done via international tax harmonization / internationally agreed upon minimums to effective corporate income / wealth tax rates. A straight up revenue tax is bananas.
- kgwgk 9y agoThere is already a VAT! This will come on top of it.
- dorgo 9y agoI guess he proposes to increase the VAT for big players instead of creating an all new form of taxation.
- kgwgk 9y agoAnd how would that work? Let’s say I’m a company that can choose to buy advertising from Facebook for 99 plus 25% VAT or from someone else for 100 plus 20% VAT. If I can deduct the VAT paid I get a better deal going with Facebook.
- 3pt14159 9y agoI'm arguing that all companies should have the same VAT rate. If for some reason we want to apply a higher rate to a company it should be via lower base deduction.
- kgwgk 9y agoThe whole discussion is about targetting some particular companies. That explains why a VAT, which is paid by the consumer anyway, wouldn't be better. If you’re going to distort the VAT chain to be get something equivalent to a tax on the sales of specific companies, how is it going to be better?
- Eridrus 9y ago> meaning they have a strong incentive to increase usage of digital services and a disincentive to put in place regulatory measures that would decrease adoption and harm growth. They have an incentive to increase revenue; you can do this by increasing the rate much more easily than promoting growth. The only thing working against this outcome is EU institutional inertia.