Also, those large tech companies can sell to French customers because French customers have money to buy from them. And the reason they have that money is largely due to the country/society/legal system/welfare/medical/etc. This is a "access to market" tax and it makes perfect sense.
As for access to the legal system? As far as I can tell this is a net negative for them. All I ever hear about around the combination of FAANG+European courts is rather overreaching and abusive attempts to force them to pay lots of money or do lots of things that were never previously required and arguably still aren't under law. I'm sure they would happily lose "access" to the French courts if it meant not paying taxes there - the flow of legislation is so overwhelmingly one way.
a) Don Vito sending goons with guns to hurt and/or kill me if I don't pay protection money and
b) "The lawful government" sending people with guns to arrest me if I don't pay taxes (and potentially kill me if I should refuse arrest).
- The French police rarely kills people, and certainly not for not paying taxes. You can argue some tax dodging is under-prosecuted.
The police ARE the state goons, so the outcome doesn´t change much .
Currently local businesses pay for the "right to the free French market", but remote businesses don't.
Now we can argue as to how much said tax is passed onto the consumer and whether or not the additional tax revenue towards various social services offsets the hit. Which is an important distinction to make when choosing what to tax, since some consumers (namely the poorer ones) have less in the way of dealing with modest price increases.
It also could be argued that companies are stealing money from nations they reside in by taking advantage of tax havens or various loopholes to reduce their tax burden. At that point companies starve the various social services and results in consumers being unfairly affected.
I'm not following this chain of logic. How is increasing the consumer price immoral? Regressive tax structure or something?
Here is a concrete example. According to economic theory, the competitive price of a good in a free market should be the marginal cost of the least efficient supplier in that market. If a tax increases your costs but you are (still) not the least efficient supplier, then prices should not change at all, and the taxes will entirely come out of your margins.
This tax is aimed at a handful of large internet-only businesses doing business in France. These businesses are large and profitable in part because they operate very efficiently, and are in competition with offline companies whose operating costs are much higher. It is unlikely that this tax will by itself make their margins higher than the competitors, and therefore is unlikely to make them raise their prices.
What is an interesting scenario, though, is that taxes + GDPR fines + complying with new copyright legislation + whatever else gets dreamed up becomes enough that internet companies decide that it is worthwhile to take a stand and exit various EU countries. They haven't for a variety of reasons (including that corporation vs country battles can make other countries wary of said corporation), but if France keeps picking a fight, those calculations could change.
One of the upcoming interesting battlegrounds along this line is from recent EU copyright legislation. It strongly implies that various tech giants will be required to put software chosen by various national governments on their network to proactively identify and block copyrighted content. Software out of their control that processes everything coming in and has legitimate reasons to "phone home". Maybe you trust countries like France and Germany to only require trustworthy software. But what about more corrupt countries like Romania? Do you trust their copyright filter software to not cross the line into spying and censorship?
And I think you're mixing your enviro-zealot metaphors; it's whale oil and dolphin tuna.
And if I remember my classic macroeconomics class correctly, that share depends precisely on the elasticity of demand (slope of the demand curve).
This might be true for many businesses but likely not the large digital ones, which enjoy ungodly margins (hence why they grow so much and so quickly). A unicorn's back is strong enough to carry quite a few saddles.
Some do.
Source: I'm French and I do :)
If we really want to compare, American-style plutocracy might actually be more democratic, because it's easier for a diverse array of citizen to become rich, than it is for French citizens to join the elite club from ENA [1] and co.
I'm not saying the USA is a Democracy, just making the point that the average USA citizen may have slightly more hard (=concrete, realistic) agency over their rulers than French citizens do.
The US has issues with government corruption, but this seems at least in part to do with americans' disdain for their government, which is partly because underfunding makes it difficult for it to operate smoothly.
But there is a cultural difference too. Many (most?) people around me accept that we pay for some freeloaders, as long as we also manage to protect and help those that really need it.
It seems to work [1] which is why we accept the taxes (more or less).
[1] Sweden scores high in most indexes trying to measure these things.
Edit: Maybe this is uncomfortable for people but it is true. If people are so comfortable paying taxes how come the social democrats are the weakest in decades? How come there is no wealth tax, no inheritance tax, no gift tax, no property tax, deduction for debt, low corporate tax, special tax deals for family businesses, some of the highest privates debt in Europe, as well as some of the highest wealth inequality, most rapid privatization and the highest retirement age? The amount of tax money spent on private sector health care has doubled in 10 years. There is a housing shortage pretty much everywhere, for employees and students alike. The Stockholm subway is run by the Chinese. Volvo is Chinese. So is what is left of SAAB, essentially all Swedish cinemas, mobile operator 3 and partly Spotify, the other Volvo, the Stockholm airport train etc. There isn't going to be any Swedish companies left in 30 years. The steel and paper mills, spirits and other traditional companies are increasingly owned by Finnish companies. Oh, and the right wing populist party with an agenda based on discontent are now the second largest in the polls. Soon enough they will gut public service media like in Denmark.
These are not the traits of a well funded state prepared for the future. People just aren't paying attention.
Firstly, "in general" is very vague. There are famous cases of rich Swedes who don't want to pay Swedish taxes and successfully avoid doing so. IKEA's tax structure is legendary isn't it?
Secondly, Sweden has cut taxes in the recent past:
https://iea.org.uk/blog/how-high-tax-sweden-abolished-its-di...
Obviously many Swedes weren't happy with high tax rates.
In this very left-wing article about how Swedes love paying very high tax rates, it is observed:
https://www.theguardian.com/money/2008/nov/16/sweden-tax-bur...
'The median voter is a woman who works for the public sector, and around two-thirds of the electorate draw most of their income from the state, either because they work in the public sector or draw benefits from it.'
So yes the average Swede is a net recipient of tax money and is thus going to think taxes are awesome. Obviously in a world where a minority are forced to pay for the living costs of the majority, "in general" the population will believe it's a good system. But is a good idea or sustainable over the long term, let alone moral?
The problem in Sweden is that if you for example you get $500k from you parents, buy an apartment that appreciates, go study for five years, have a kid and take parental leave for another two years you pay maybe 10-20% tax overall (on the appreciation mostly) and nothing for health care or education for yourself or your kids, which might go to semi private school.
While the average person who don't have rich parents, or maybe kids, and are trying to work their way up are paying 40-50% or more on their income and not getting much in return. And on top of that are paying for some of the highest property values and general prices in Europe.
Stockholm built the most expensive hospital in the world, yet has one of the lowest tax rates in the country.
I don't mind paying taxes, but I want them to be put to good use and not be some sort of discount system for those who are already well off so they can take more vacations. (I do realize that their is a lot of history behind that, but it is now getting warped into some form of crony capitalism).
"Do you think that taxes are being used properly?" is a better question, since having roads to drive on or unemployment if you get let go from a job are quite useful; both are taxes. This is a harder question to answer and reduces the emotional response they are looking for.
That is not even a dive into economic inequality; Person A having 10 personal homes in three different countries while Person B lives out of their car pay-check by pay-check.
It's true that in the US, the average person sees very little benefit to federal taxes. Most real, helpful things such as police, roads, schools and such are perceived to be only from local or possibly state taxes. This is not entirely true of course since Federal taxes do help for education and roads notably, but I would say that most people don't really think about it that way. There's also a very strong individualism in the US, which tends to make people overlook outside factors when evaluating success, the "if you work hard and believe in yourself anything is possible" kinda thing. Finally there's a general belief in the corruption and incompetence of big government, the idea that this money taken will just be wasted.
So taxes, especially Federal taxes, are seen as a burden, a form of robbery even. And by a bunch of incompetents no less.
In France, people do see direct benefits of paying taxes in their daily lives, mainly related to the medical system.
There is also a history of things like trains, the post office, ferries, electricity, telephone service, being handled by the central government (this is before the privatizations starting the 1990s), and crucially, people associating the involvement of the state in what were in some cases world class services. And the French don't generally see a problem in letting the government handle these sorts of things. As an example there is now a petition going around in France to keep the Paris airports under government control.
So, paying taxes in France is seen more as a necessary burden to having a functional society rather than highway robbery.
What does piss off the French is not everyone paying their fair share, which these new taxes are helping to compensate. Even if not much at all in terms of actual revenue for the state, it's more of a symbolic gesture to appease the population.
I disagree with this. The US’s civil service organizations have immeasurably improved the quality of lives of everyone. Organizations like FDA/FAA/CDC/FCC/NASA/research at universities/Civil Engineering Corp/Transportation/judiciary/etc are crucial to advancing society and most importantly, the people in these organizations are by and large not corrupted, which is a very under appreciated assets and once lost, will be extremely hard to earn back. Obviously there are and will be a few bad actors, but the reason people don’t have to worry about bribing/violence/etc is that there is a higher level of trust in society and not everyone is out to get theirs before someone else takes it.
Once that attitude changes for most people, I don’t see how it will be possible to get it back.
What I meant was that the average person doesn't perceive it as such, IOW they don't see the benefits of the Federal government, which is not to say that there are no benefits for the average person.
This is probably because there is a lack of publicity about how these types of programs improve people's daily lives.
Instead we get a lot of politicians talking about how wasteful these are, or how it's part of the nanny state, or stifling growth by taxes.
And the media doesn't generally oppose this viewpoint... As a example, I remember during the Democrat debate in Miami where Sanders was not asked how his healthcare would help people, but whether it would raise taxes.
Evidently they consider that a fair risk.
Amazon will rise prices? That will be just wealth redistribution from rich through Amazon and taxes to poor who are going to buy local potatoes.
A company might raise prices to pay for an increased dividend. Companies have threatened the very existence of the company, or made a loss to pay increasing dividend.
So any taxation is justified?
> It's not arbitrary to expect businesses to pay for services they benefit from.
Any digital company with revenue of more than €750m ($850m; £670m) - of which at least €25m is generated in France - would be subject to the levy.
That sounds arbitrary.
That's a straw man. You're leaping from "some type of tax is justified" which is quite a bit more reasonable than "any tax".
And if you want to say it's a slippery slope or some such, well, ever single action if extrapolated to the extreme can be a viewed as such. If 3% is reasonable and then it's proposed to goes up and up, fight the increase, not the initial reasonable action. Of course this may be putting words in your mouth, so I won't attribute it to you, only that I preempt a logical counter to mine.
No, it isn't.
Road tax pays for road maintenance. Municipal tax pays for municipal maintenance. VAT and Income Tax pay for government expenditure. Taxes are collected in exchange for a service.
Foreign businesses providing entirely digital services in France aren't actually receiving any kind of service back from the French government. In other words, this specific tax is just a mechanism for collecting money arbitrarily in exchange for nothing.
That's a slippery slope.
You've just ignored all the above posts without addressing them. The other posts make it clear without any counter argument from you that government provides a safe and stable addressable market to do business (and literally the currency).
Because the dollars being used to pay for the digital good have already been taxed, probably many times over, by the time the credit card transaction settles and the merchant account is credited at the end of the week (or whenever).
It’s reasonable to question if this particular tax was designed in a way to target specific foreign companies, without a compelling nexus, which would make the tax predatory.
Amazon doesn't pay taxes when they're the merchant.
How does a government quantify providing "a safe and stable addressable market to do business"? What was the formula used to determine the tax bracket?
Unless we have a clear formula we can reason about, the tax would be arbitrary. Is that not the case?
Moreover, shouldn't the cost of providing "a safe and stable addressable market to do business" be a constant? We know how many French citizens utilize the service, and we should also (somehow) have the overall costs of "keeping the French market afloat". If so, why does the government tax a percentage of the total revenues?
If you're looking for a simple and logically designed system, the international tax system isn't it.
Think of it backwards: if we agree that X level of taxes need to be gathered to maintain common good, the government needs to gather it in the least unjust way possible. Taxing internet giants, to europeans, seem mostly just.
We can argue whether that's a good thing or not, but not whether there's a slippery slope when it comes to implementing a new tax.
Taxes get repealed all the time. My province just repealed its carbon tax a few weeks ago: https://www.alberta.ca/carbon-tax-repeal.aspx
And even if I couldn't name a tax that was repealed, many are way lower than in the past.
Peasants would rebel because they'd be taxed to (literal!) death.
Window tax. 1990s UK Poll tax. The luxury tax token system the US used before sales taxes.
> We can argue whether that's a good thing or not, but not whether there's a slippery slope when it comes to implementing a new tax.
Dude what? Wealth redistribution? Lots of countries have much higher taxes that actually redistribute that wealth. Don't call our system socialist, it isn't. Have you ever lived in socialism (I have)? It isn't even here in California!
A corp will raise prices to whatever level the market will bear. Why shouldn't a society do the same with taxes?
A corp exists in a competitive market and can rarely raise prices to "whatever level the market will bear". If I don't like their prices, I use their competitor.
What competitor does my mandatory government and it's confiscatory tax agency have? What alternative do I have but to hand over half my work to them to be frittered away on foreign wars and grants for indolence and incompetence?
Isn't that exactly what VAT tax is for?
>And where does your assessment comes from? Just guess?
An educated guess that I am strongly confident in, to the point of willing to bet most of my savings on it. And I am not the kind of person who would usually bet any money on anything at all. My most risky money bet so far is putting a portion of my paycheck in 401k.
And yes, this makes it very hard for new businesses to enter the market as they do not have the resources necessary to do tax optimization.
Edit: I don't work for Amazon, though my brother does. I also don't work at a company that has much of a stake in this fight.
Inter-country competition helps to keep them honest, and corporations get to choose the luxury of where they operate from and do business out of.
There's value in competition, because it's about the closest we've been able to get to evolution. The issue comes about when competition is lopsided - I can understand the complaint here from the French, but I don't care at all for their solution.
Administrative burden limits are not arbitrary. They are used in many places all over the world.
Yes. We have income tax in the US. It's the same thing.
Google doesn't have to pay the tax if they're not operating in the country. It says right there that if their revenues are +$25m a year, they are subject to the tax. Conversely, the US can also levy taxes against French digital services, and maybe they should.
My guess is the cost of not operating in France is much higher than the tax to do so, so that would be a silly maneuver.
Tangentially, I find it hilariously hypocritical that the Trump administration is whining about unfair tariffs on digital services.
Ignoring for a moment that this rationale can support any tax policy at all (including 100% tax rates)... This holds for all businesses, not just large tech companies. So why is the tax focused on the latter?
Isn't that true for any rationale for tax? I mean, I wasn't talking about tax rates, that's a completely separate discussion...
>This holds for all businesses, not just large tech companies. So why is the tax focused on the latter?
Because other businesses are already effectively taxed by existing laws. Overseas tech giants are targeted because they were legally avoiding existing taxes.
Because they are those who could and had the resources (legal and financial teams) to avoid said taxes, until now, and they happily did so (ie billing through Luxembourg or Irish post boxes). Not that I'd condemn it. Countries and laws were just to slow in catching up.
Most other businesses couldn't (and still can't) go around playing with loopholes because they don't have the means to and most of their goods are, well... physical.
Many countries have laws that effectively say that you must follow the spirit of the law. This seems analogous. See GAAR in https://en.m.wikipedia.org/wiki/Tax_avoidance
Other than the reasons the other replies have mentioned, it is also possible that enforcement isn't worth it for the smaller businesses (i.e. if they did apply to everybody they'd just lose money overall trying to get everybody to comply).
And iirc Amazon already pays that in the form of VAT.
The French government is taxing businesses not because this is somehow morally right or efficient, but because it is easier than convincing its subjects/citizens that government services merit higher personal taxes.
https://www.statista.com/statistics/220534/googles-share-of-...
You know perfectly well that this tax is exclusively to counter the tax burden shifting. If corporations were setting up companies in countries and paid reasonable taxes on profits generated in those countries... no one would raise the possibility of these taxes.
Staying out of the way? They can do that for free.
It's not like they don't already pay taxes. This is an additional tax on top of all the other ones.
By showing ads.
Ads only need eyeballs to make money.
(Also, arguably, French eyeballs are a resource belonging to France, which Google exploits.)
Why don't you try justifying that one? Because I posit that if the French government didn't exist the market would exist anyway.
Without a government the only way of maintaining your wealth is being a warring faction. Those rarely require advertising online.
Anyway, the ultimate authority on which taxes and to what percentage will be imposed is the guy with the most power to execute decisions in the country. In France, that guy is the France government. You may think that this particular new rule is unfair, but I think the lawmakers do not care. There are already many taxes that are unfair from certain points of view, such as income tax. Life in a country run by a government is not fair, if you interact with the country, you have to obey its laws, the government is not interested whether you agree with them (that is, unless there is many of you so you can get together and put pressure on the government).
Your answer makes no distinction between them so doesn't actually answer the question.
Then the US every decade or so gives a money repatriation tax amnesty, effectively providing huge subsidies to US firms dodging all these taxes.
So the government decided to setup a new tax they couldn't. Can't really blame them.
This is only possible because internet. So, they're imposing a tax on companies that serve French customers via the internet but aren't based in France, so that all companies pay tax again.
Does that make sense?
As soon as you do business,you have to register yourself to the "tax office"..
Now you structure you company in such a way, that the company pays more money for the trademarks of your partner company, than you make.
Now of course, that is something a small company with 50 people can't do.
So the company with 50 people can't make ends meet, and the company which makes 200 million, continous to make money hand over fist.
The time and costs involved to setup, maintain and enforce such a system would be ridiculously high compared to what it would bring in.
Another answer (still only considering foreign businesses) would be that for companies making so little, the burden could be much greater, hindering their growth (and future taxability).
And that's just from the tip of my head
Actually, this would be unconstitutionnal. French companies meeting the criteria will also pay taxes.
This tax is specifically on revenue that doesn't do that.
(Not that I am a proponent of this tax)
They try fooling around with said laws, but for them it's illegal and they better not get caught.
2. You don't need French schools to learn how to Google things
Political propaganda/advertising is a great investment in times of choas/crisis.
>How would french consumers pay for satellite access without a functioning economy?
Use crypto currency or foreign currencies.
They need a sufficient internet infrastructure. People with access to it.
People with money to spend.
People with enough peace of mind to spend it on something else than absolute essentials.
People with enough peace of mind and free time to leisurely waste on mostly useless websites.
People to whom the physical goods of a great number of their advertisers can be delivered (infrastructure & post system).
Eyeballs alone are worthless.
The differences in CPC between an affluent white male working in tech in San Francisco and a poor black woman selling peanuts on the street in Rufisque, Senegal (which isn't even the most extreme opposite one could think of) is proof of that.
>The differences in CPC between an affluent white male working in tech in San Francisco and a poor black woman selling peanuts on the street in Rufisque, Senegal (which isn't even the most extreme opposite one could think of) is proof of that.
Why then are advertising giants like FB so eagerly expanding into "3rd world" markets and offering "free internet"?
The French government.
As for expanding into "3rd world" markets, the average monthly Senegalese salary appears to be 139€. And this is a country considered to be doing well in the region.
They're expanding and offering "free internet" because there's nowhere else to go. Because even though it's poor now, there's growth, and they want to be established and deeply encroached when those markets will become worth it. Because they believe better and wider internet coverage will spur even more growth.
The only reason these companies can exist and be worth anything today is because of all the groundwork and investment that has been and continuously is made.
Where else could they expand?
I'd say it's pretty obviously a calculated risk that they'll develop in value once hooked. Didn't Facebook have a scheme that gave net access in the developing world that re-created the AOL model? Free internet, but it's only FB internet.
The complete or comparative lack of regulation in many areas probably encourages too.
Worked for tobacco companies, works for most other industries.
All money made on the white market in any country is facilitated by that government, and taxes are paid on all profits to pay for the services which allowed the profit to be made.
>The other theories of taxation is that it should be used to raise revenue from the best means possible. I disagree with that framework but applying taxes arbitrarily hardly seems fair or the best way to raise revenue.
It's not arbitrary to expect businesses to pay for services they benefit from.