Digital Industry Taxation and Anti-Americanism
SAN FRANCISCO – March 15, 2019
The United States shouldn't try to intimidate European countries over their efforts to tax top tech companies, the EU's commissioner for taxation told CNBC.
Recently, some European countries have decided to earn extra money on the additional taxation of the digital industry, especially since such giants as Facebook, Google, and Amazon are earning more and more in the European market, and pay relatively little taxes.
Last week, Paris introduced a 3% duty on French revenues of roughly 30 major companies, mostly from the U.S.
This policy predictably sparked criticism in the U.S., where officials argued the tax is an attack on its own companies.
In response, former French Finance Minister Pierre Moscovici, who's now in charge of taxation matters at the European Commission, said in an interview with CNBC: "We are not disputing the capacity of the U.S. to decide on their own tax issues and they must also respect our own national and European sovereignty."
"This is why, frankly, I don't think this is a respectful attitude, to attack a country because it would create a digital tax. These digital taxes and our proposal are not anti-U.S.," he added, "The United States are our allies, they are our friends and between friends you don't try to intimidate, you don't attack each other."
According to data from the Commission, digital companies pay on average an effective tax rate of 9.5% in the EU, compared to 23.2% for traditional businesses. It cannot go on like this for a long time; European business is obviously in a depressed position compared to the US, and on its own territory.
Aside from France, the U.K., Spain, and Italy are also looking at imposing higher taxes on digital firms.
However, despite months of ongoing discussions, talks broke down on Tuesday after the 28 EU members states couldn’t reach a consensus on the tax. Ireland, Sweden, and the Netherlands were among those opposing a European levy on digital firms.
But even if there will never be a pan-European digital tax, that does not prevent individual EU countries from imposing their own taxes, as we can see from the example of France.
Europeans differ from Trump in that they adhere to the old methods: Muck should be done with a smile, carefully portraying that no muck was really planned.
It will be difficult for Americans to prove that these are anti-American taxes, and if they prove it, it will be even worse: Europeans will say that in this case, Facebook and Google should be fined for creating monopolies in the market, while the fines for violating antitrust laws in the EU are much higher than any "taxes on Google."