France not entirely daft - shock

from Ecommerce News Europe:

The French Minister of Finance told newspaper Le Parisien that the proposed tax is aimed at companies with worldwide digital revenue of at least 750 million euros and a French revenue of more than 25 million euros. He wants to target commission-based online platforms, like Amazon or Booking.com. Companies that sell their products on their own websites, like French ecommerce company Darty, wouldn’t be targeted.

Godo start – the point about these platform/intermediary companies is that their value is in network effects aka rent, and rent is the main thing that governments should be taxing. You have to be able to distinguish it from true earnings, which is why companies like Darty are exempted. People only use Facebook, Amazon, Twitter etc because everybody else does.

In total, there are about 30 companies that would be affected if the tax plan gets greenlighted. These companies are mostly American, but also German, Spanish and British, as well as one French company (Criteo) and several companies that are originally from France but have been bought by foreign players.

According to Le Maire, a taxation system for the 21st century has to be built on what has value today. “And that’s data”, he said. The minister also added it’s a matter of fiscal justice, with these companies paying some 14 percentage points less tax than small- and medium sized enterprises in Europe.

He misses two points. It’s not so much control and ownership of “data” in itself that indicates a rentier status (some companies store lots of their own data, and good luck to them, that’s not rent, that’s good record-keeping), it’s “other people’s data” aka network effect etc. And how much tax other companies pay is irrelevant, if they are earned profits in a competitive market, then they should be taxed at lower rates (or not at all). But never mind.