Monday, January 21, 2013

France Proposes an Internet Tax

How it would feel paying a tax on the internet!
PARIS — France, seeking fresh ways to raise funds and frustrated that American technology companies that dominate its digital economy are largely beyond the reach of French fiscal authorities, has proposed a new levy: an Internet tax on the collection of personal data.

The idea surfaced Friday in a report commissioned by President Fran├žois Hollande, which described various measures his government was taking to address what the French see as tax avoidance by Internet companies like Google, Amazon and Facebook. 

These companies gather vast reams of information about their users, harnessing it to tailor their services to individuals’ interests or to direct customized advertising to them. So extensive is the collection of personal details, and so promising the business opportunities linked to it, that the report described data as the “raw material” of the digital economy. 

“They have a distinct value, poorly reflected in economic science or official statistics,” the report said.
Google generates more than $30 billion a year in advertising revenue, including an estimated €1.5 billion, or $2 billion, in France. Yet, like other American Internet companies, it pays almost no taxes in France. That state of affairs upsets France’s policy makers, as public finances have been stretched thin and French Internet companies struggle to gain traction. 

“We want to work to ensure that Europe is not a tax haven for a certain number of Internet giants,” the digital economy minister, Fleur Pellerin, told reporters in Paris on Friday. 

But getting Google and other U.S. technology companies to pay more corporate taxes on their profits in France could take a long time, the report acknowledges, because this will require international cooperation.
In the meantime, France has discussed a variety of other taxes. Under the predecessor to Mr. Hollande, Nicolas Sarkozy, the government proposed a levy on Internet advertising. But that idea languished after local companies complained that it would affect them more than Google. Mr. Hollande’s government is also overseeing talks between Google and French online publishers, who want the search engine to pay them for linking to their content.

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