Re:Italy Approves ‘Google Tax’ on Internet Companies
by DannyBee on Tuesday December 24, 2013 @03:13PM
(#6960965)
Tying your country's future ability to support its population in any large part to the whims of companies that are non-local sees like a self-evidently bad idea for any number of reasons.
For starters, they have no skin in the game. Unlike local businesses, they don't care what happens, at all. At least the mildly local large companies have some cares about what happens to the country (because they own land, have in-country employees). But the large multinationals basically don't. The number of in-country employees is usually very small.
Second, you have no control over their performance or policy decisions. They can do things that are completely and totally devastating to you (like close down the local branch and stop paying taxes), and you can do nothing, since you have no physical control over anything. Plus, you know, you will now be dependent on their performance globally (this is likely to happen to any sufficiently large company anyway, but ...)
As a result, as you become more dependent on them for tax revenue, government will have to do more and more to appease them to keep that revenue flowing. You have to be very careful, because other than X amount of revenue, you literally have nothing they need. In a country like Italy, the amount of money is not large, so you can't just play hardball with them, because they'll just take their ball and go elsewhere, and you will be left high and dry. If a few multinationals do it, Italy may very well have to run and appease a number of other companies to keep their revenue in Italy.
These are just some of the simple reasons. The short answer is: If you do this, you may as well just hand them your government (or prepare for long term economic hardship).
For starters, they have no skin in the game. Unlike local businesses, they don't care what happens, at all. At least the mildly local large companies have some cares about what happens to the country (because they own land, have in-country employees). But the large multinationals basically don't. The number of in-country employees is usually very small.
Second, you have no control over their performance or policy decisions. They can do things that are completely and totally devastating to you (like close down the local branch and stop paying taxes), and you can do nothing, since you have no physical control over anything. Plus, you know, you will now be dependent on their performance globally (this is likely to happen to any sufficiently large company anyway, but ...)
As a result, as you become more dependent on them for tax revenue, government will have to do more and more to appease them to keep that revenue flowing. You have to be very careful, because other than X amount of revenue, you literally have nothing they need. In a country like Italy, the amount of money is not large, so you can't just play hardball with them, because they'll just take their ball and go elsewhere, and you will be left high and dry. If a few multinationals do it, Italy may very well have to run and appease a number of other companies to keep their revenue in Italy.
These are just some of the simple reasons. The short answer is: If you do this, you may as well just hand them your government (or prepare for long term economic hardship).