A digital tax is imperative and indispensable

There is still a tendency to view the internet through the lens of naivety. Despite all the advancements since its conception decades ago, there remains something nostalgic about thinking of the internet as a beacon for human freedom, engaging with the world at any time of day. Yet some were onto its flaws in its relatively early days, with the late David Bowie arguing in 1999 that the internet was an ‘alien life form’ and something ‘exhilarating and terrifying.’ 

It appears governments have finally caught up with the singer-songwriter’s perspective two decades later. A number of European nations – including France, the UK, Italy and Austria – are due to introduce a digital sales tax. This would require internet companies like Google and Facebook to make payments for the countries in which they are used, rather than just the nations where their headquarters reside. Naturally, this has sparked a backlash from the US, who, according to the BBC, threatened tariffs on £1.8 billion of French goods, which have now delayed their introduction of the tax. 

The near universality of their usage would suggest that these companies are more than just corporations, but have a social role within nations

The tax raises multiple questions over the role of technology giants whose brands have become such a part of the Western everyday life. The near universality of their usage would suggest that these companies are more than just corporations, but have a social role within nations. This matters both in terms of what users receive – the most popular websites Google displays aren’t necessarily the most accurate – and the contribution they make for the privilege of their customer usage across states. 

Indeed, it is almost as though these companies have come to behave like states. The ability through which they can impact government is extraordinary. Whether through the rate of corporation tax or the level of worker’s rights, the decisions that governments make are implicitly linked to the future actions of these transnational corporations. It is therefore perfectly sensible to understand why, fearing a response from the US and perhaps the tech giants, France has delayed the implementation of such a tax. 

I instinctively feel such a tax is defendable. No government has money; it has to be obtained from elsewhere. Given that governments need money for any project, it seems justifiable to tax corporations which have an income far beyond anything most individuals could ever reach. In 2018, Google had a net income of over $14 billion US dollars, while Facebook managed over $22 billion and Apple received nearly $60 billion. These are not pithy sums where small companies will be damaged, but astronomical amounts of money. Financially, the least these companies can do is make a contribution. 

Indeed, it is almost as though these companies have come to behave like states

What would be the purpose of such a tax? Given the UK government received over £754 billion in 2017/18, it’s easy to see how any extra sums could easily disappear among the rubble of annual government revenue. Taxes will always penalise someone and so the extra money raised must serve a cause. It can certainly be argued that a digital sales tax could help prevent tax avoidance. The virtual nature of such companies means the precise location where taxes are required is ambiguous at best. A digital tax that is based on countries the company operates in would at least provide some clarity and transparency. 

There is always the potential for such a tax to have negative side effects. Companies could simply pass the extra cost onto consumers, increasing the price of products like smartphones and laptops. This has been evident with the tax on sugary drinks with brands like Coca Cola passing on the cost to consumers. For example, according to Sky News, buying a 500ml bottle costs an extra 12p while an extra two litre bottle costs an extra 48p. Realistically, there’s every chance companies like Apple could follow suit, affecting students in particular. According to the Statista website, 96% of 16-24s own a smartphone while over 70% own a laptop. While the cost could increase, individuals would at least know companies were contributing towards the countries in which they gained revenue. 

Technology is only going to advance in the future. The recent government dilemmas over using Huawei, a Chinese owned technology company, as part of the UK’s 5G network, are a prime example of this. Thanks to the failure of successive governments to invest in 5G, we have been left reliant on other networks to facilitate the progressive growth in technological innovation. Perhaps some money raised from these tech giants could go directly towards improving broadband, for example, which would enhance the lives of all individuals. 

Whether through journalist reporting, citizens exposing wrongdoing or discussing unorthodox ideas, the ideal of international communication should always be defended and celebrated

While I can understand America’s opposition towards the extra digital tax, it is only because America has been dominant in technology, particularly during the 20th century. That is the nation to be based in for all the highest quality research and development, whether technological or otherwise. It is because America has been in the ascendence from this development, through the headquarters of Silicon Valley, that means its companies should pay for the profits they globally receive. 

Maintaining internet freedom should always be the prime aspiration. Whether through journalist reporting, citizens exposing wrongdoing or discussing unorthodox ideas, the ideal of international communication should always be defended and celebrated. Companies that help to facilitate this should be welcomed. But, given the depth of their impact on world affairs, including democratic elections, these companies must take some accountability for the range of nations they operate in. A digital tax may not solve, but would certainly help, this endeavour.