France’s unstable tax scheme may see yet another shift in the coming years, as LeFigaro reported earlier this month that an “Internet Tax” may see the light of day in the next few years. Specifically, the French government may begin taxing the storage of personal data about French internet users. The proposed law is expected to be brought to the public in the beginning of January. France has made several attempts at taxing multinationals who operate out of other countries – the most notoriously unsuccessful was the Google Tax, which proposed a tax on all virtual goods trade with French clients (Google turned around and passed the tax onto French clients, and after large businesses complained about the rise in AdWords costs, the law was revoked months after its implementation).
This tax will be yet another step in the French government’s attempts to target Apple, Google, Facebook, and other companies running tax-optimization schemes through Ireland in order to avoid paying higher French taxes. The tax may act as a sort of ‘virtual Value-Added Tax,’ meaning that companies are taxed based on the amount of information they have on users, as well as ‘good-practice’ taxes which you tax more those companies who turn around and sell user data without informing users.
There is certainly a need for France, and other European countries not in the top 10 Paying Taxes list, to figure out how they will get revenue off of their citizens, as currently the value per consumer on the internet is significantly lower than these governments would like to see. While I’m still holding out for a European-level reform in the way taxes are treated – unlikely and impractical – it is interesting to see the blow back effects of a Europe more united than ever.
Personally, I hold that countries are going through an identity crisis in the age of multi-national business – why do companies want to pay taxes to you? What is your value? How can you extract value from companies if they are extracting value from you?
We’ll see how it all plays out.
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