
Tech giants face 2% UK digital services tax - djrogers
https://www.bbc.com/news/business-46023450
======
ilikerashers
The UK has gotten very frustrated with the slow movement of international
lawmaking in this space. With business rate slashes to help struggling
retailers (retaliation against Amazon) and mental health funding increases for
schools (retaliation against Facebook/Google), I'm quite happy to see
something happen at last.

I expect other governments to follow suit.

From a tech defence angle, I can't see Trump rallying in support of his good
buddy, Jeff Bezos.

~~~
microcolonel
> _The UK has gotten very frustrated with the slow movement of international
> lawmaking in this space_

The space of... international laws to transfer money for literally no reason
to the government of the UK, even though they have no services or investments
to recuperate related to the money in question?

I mean, it's fair that everyone asks for a slice of the pie, but that doesn't
mean it's fair that they take it.

~~~
kbenson
I think the space is _their market_ , in which they set the rules and may want
to tip things one way or another to prevent starvation and entire dependence
on external parties.

In the general case, it's once thing to let an industry shrink because they
are out-competed, it's another entirely to let them shrink to the point where
recovery is extremely hard or event nearly impossible because of the loss of
domain knowledge.

In addition, there's also first mover advantage, and in some industries that
can mean the first mover dominates to such a degree that fair competition
(market information is distorted) is hard. There's nothing inherently wrong
with trying to alter the market, it all depends on the goal and methods. If
this were applied towards bolstering competition by incentivizing Europeans
offerings, that might benefit everyone eventually.

~~~
candiodari
> I think the space is their market, in which they set the rules and may want
> to tip things one way or another ...

So far I'm with you.

> to prevent starvation and entire dependence on external parties.

Heh. Man I remember when I used to think like this. I remember the time
fondly, oddly enough. Sadly, sorry to say, you will be cured of this.

THIS is also the UK government:

[https://en.wikipedia.org/wiki/Independent_Inquiry_into_Child...](https://en.wikipedia.org/wiki/Independent_Inquiry_into_Child_Sexual_Abuse)

or, perhaps,

[https://en.wikipedia.org/wiki/1978_smallpox_outbreak_in_the_...](https://en.wikipedia.org/wiki/1978_smallpox_outbreak_in_the_United_Kingdom)

The UK KNIGHTED the person who lied in court to get the government out of
paying compensation for ONE VICTIM that the UK government, after being
forewarned of exactly what would happen ... to which the UK government didn't
react to save a buck. Resulting in a problem that could have easily killed 1
million UK citizens, majority of them children. Needless to say, the UK
government did impose incredible costs on some of it's citizens, in almost all
cases with very flimsy justification (one person's wife being forcibly
kidnapped, without informing the guy or their families, never to be allowed to
see each other again, after the government killed her. I mean, it's almost a
Disney villain plot, except without the good ending)

Sorry to say, but if you think the UK government has either your or any of
it's citizens' interests at heart. Or any other government. You're sorely
delusional.

~~~
ionised
What does any of that crap have to do with the UK taxing these companies on
sales?

~~~
candiodari
The point is to disavow the GP of the notion that the UK state is trying to do
anything but generate more income for itself by illustrating some of the more
recent utterly disgusting decisions the UK state, as an organization, made.

So:

Fairness - Nope

Fixing competition - Nope

Altering the market - No

Incentivizing European offerings - Nope

None of this is a goal. Another example linked to is that the UK state is an
organization that has been known to use violence to kidnap child abuse
victims, and lock them in with other sex offenders, then afterwards refuse so
much as acknowledging that might have been a wrong decision, when the
inevitable happens.

Such an organization, I'm sorry to say, can be reasonably assumed not to have
the interests of you, or me, or anyone but itself, at heart. It's on the side
of big companies and tax law is just driving a hard bargain. It is very much
not about making their own job harder by doing such things as massively
increasing the number of people they need to negotiate with (otherwise known
as "competition").

But go ahead, down vote me, of course the state is the epitome of all that is
good of the universe. I understand that if that were to be a flawed way of
seeing things, social policies start to sound a lot less like they're helping,
and much more like they're cynically designed to increase the abuse suffered
by the "helped" people, and prevent them from finding actual help, get out of
their situation, or find redress. This shows you a new way of thinking about
social policies and why they're made. Anti-child abuse laws are about
encouraging child trade (and with that, inevitably, abuse), and preventing at
all costs any means those kids might want to prevent the state from harming
them further, and above all, to eliminate any legal redress such children
might have against the state, at the damage done by it's agents to them.

Of course, one can easily make the determination about these policies. Find a
few homeless, find a few now grown adopted children, and find a few that look
smart, and ... ask them.

We all know what view they will have. The irony is that usually people turn
those opinions into "see ? We need more child care/job programs/homeless
assistance/...". A method for preventing those very programs from inflicting
future damage as was done on these people is never discussed.

------
robot
This is a pretty good idea. Tech giants make money in Europe paying little to
no tax incorporating in Ireland, while all small to medium businesses
incorporated in the UK pay the usual tax. Its simply unfair.

~~~
tomatocracy
The global arguments about multinational tax usually conflate at least two
issues:

\- total tax the corporate pays globally; and

\- share of the cake paid 'locally' vs in the home jurisdiction

This measure seems to me to be more about the second of those than the first,
but politically thats a hard sell so you see all the statistics about how much
tax they paid 'in the UK' etc etc. Most people misread that.

Politically of course agreeing on a fair share of the cake is much harder than
saying 'we should tax them more globally'.

~~~
albertgoeswoof
The fairest way is to pay tax where you do business, you know, like you’re
supposed to.

It’s not really different for tech companies or global companies.

~~~
tomatocracy
But it's much more complicated than that because the system is not meant to
either incentivise or disincentivise insourced vs outsourced functions (and
what you seem to be suggesting would create incentives for offshore
outsourcing for them, which would be politically unpopular). And corporation
tax is a tax on profits, not revenue (VAT already exists and is a tax on
revenue and Amazon UK pays a very large amount of VAT).

Maybe a couple of examples: if I buy clothes from Amazon's own brand/white
label, which are manufactured in another country, what is the appropriate
amount of profit that Amazon UK should be allocated and taxed on for my
purchase? Now what if Amazon sold that operation to someone else? Should they
then be allowed to deduct it? If you get that wrong, then you create a tax
incentive to either insource or outsource functions (since for the same cost
structure, one will save tax over the other), which is an undesirable outcome.

Or let's say I'm a UK Amazon Prime subscriber. I use some of that for video
content, some for other services like postage. Some of that video content was
created by their own studio in the US or Canada and is only available on their
platform; some was licensed from a third party. How much of my prime annual
fee should be allocated to the Amazon UK operation? How much to the internal
Amazon studio? What about other bits of Amazon which are involved? Again, how
do you ensure that that doesn't created a non-level playing field vs third-
party studios? Third-party hosting services or CDNs? Third-party payment
processors? Etc

Then consider that until last year, Amazon in the US would have also been
taxed on the whole empire's worldwide profits but been able to deduct taxes
already paid under various double tax treaties. So if the UK taxed amazon
more, the US would have received correspondingly less. This is still partly
true.

None of this involves anything which is tax motivated - it's all business
motivated. Layer in tax incentives various government put in place for other
policy reasons and it becomes even more complicated.

"Fair" is very hard when you get to the level of complexity involved in these
types of businesses.

~~~
vosper
> Amazon UK pays a very large amount of VAT.

Amazon collects a very large amount of VAT, no? It's the customers who are
paying, not Amazon.

~~~
candiodari
By that reasoning, it's the customers paying company tax, too.

Hell, customers' are the ones paying Jeff Bezos' capital gains tax by that
reasoning.

~~~
tomatocracy
Corporate direct tax incidence is typically thought of as applying to some
split of capital providers (shareholders and lenders) and employees. Most
economists think it falls mostly, if not entirely, on capital providers.

Customers might figure in that in an even smaller way but its probably very
minor.

------
sys_64738
This will start out as 2% in 2020 but probably be 10% by 2030. That's usually
how these things work in the UK.

~~~
blibble
for some value of "usually"

corporation tax: 30% in 2008, 19% in 2018

zero rate band of income tax: £3000 in 1990, £11850 today (the increase is
more than double that of inflation)

~~~
rwmj
Personal allowance (zero tax band) raised to £12,500 from April (in the Budget
today).

This gives money to richer voters because the higher your earnings, the more
tax saved. But corporation tax takes money from rather anonymous entities,
which of course affects voters too in the end but in a rather indirect way.

~~~
blibble
> This gives money to richer voters because the higher your earnings, the more
> tax saved.

a rise of the zero rate equally effects anyone earning above the new zero rate
threshold (regardless of how much they are above it [1])

a full time minimum wage employee earning ~£14,000/year gets exactly the same
reduction in tax from this specific increase as an engineer on £90,000/year

[1]: once you get above £100,000/year your personal allowance goes down
(ultimately to zero)

~~~
rwmj
The Resolution Foundation disagrees:
[https://twitter.com/resfoundation/status/1056969156741029889](https://twitter.com/resfoundation/status/1056969156741029889)

However I agree that anyone earning over £100K won't be affected because of
the peculiar system where you lose the personal allowance in steps over this
threshold.

~~~
blibble
they don't disagree, your point was:

> Personal allowance (zero tax band) raised to £12,500 from April (in the
> Budget today). This gives money to richer voters because the higher your
> earnings, the more tax saved.

the conclusion of which is factually incorrect, and unsupported by your linked
chart (which includes more than just the increase in the zero rated band)

~~~
rwmj
What's the mechanism which is causing a benefit from the 1st and 2nd (the very
poorest) groups in that graph, which is caused by adjusting a threshold at
£50,000?

------
bepotts
I know this gets said a lot, but I live for the day the world sees innovation
and quality tech companies from Europe instead of taxation and regulation.

~~~
chongli
There's lots of innovation and quality tech in Europe. We just don't see it
because Europe has much greater diversity of language and culture than North
America. This means that companies can target a niche in their country that
has zero relevance to Americans.

Not everything of value needs to be a billion dollar unicorn. There are more
things in heaven and earth, Horatio, than are dreamt of in your philosophy.

~~~
bepotts
English is the business language of the world. I highly doubt there's some
tech epicenter near Brussels that would rival Silicon Valley (or even New York
City, Seattle, or Austin) if only those companies spoke English.

And sure being a Unicorn is everything, but it sure as hell isn't nothing. I
have no doubt there there is _a_ company in Europe doing something amazing,
but Europe doesn't have a culture that continues to churn these companies out
and I can't help but believe that their approach to regulation and taxation is
apart of the problem.

They get so giddy about regulation that it's kinda baffling. Regulation should
be thought of an unnecessary evil - not some exciting project.

~~~
mattmanser
I remember some tech crunch reporter claiming they'd never heard of a nine
figure tech sale in Europe, the same day as a local business in my home city
(Nottingham) was sold for over £100 million.

It's not that we don't have a tech industry in Europe, it's just that US tech
reporters are often insular, ignorant and lazy.

~~~
tomcam
> US tech reporters are often insular, ignorant and lazy.

And then there are the bad ones…

------
dabeeeenster
Ed Sheeran pays more tax in the UK than Amazon.

~~~
mFixman
Ed Sheeran is a person and is taxed differently than a company. That article
is manipulative clickbait.

UK Amazon executives pay more taxes than Ed Sheeran.

~~~
sandworm101
"Ed Sheeran" isn't a person. There is a person by that name, but when you high
"Ed Sheeran" you don't address the check to him. It goes to a production
company who then deducts associated expenses, from his personal trainer to his
airfare. That company then pays the flesh-and-blood Sheeran a salary for
services rendered. If he is anything like the other 99% of celebs, he keeps
money in his production company and pays himself a salary low enough to meet
his immediate needs, thereby avoiding or at least delaying income tax. This
company will continue to pay him this salary long after he disappears from
public life and, theoretically, could be making payments to his estate long
after his death. Should he want more money for something like a house, as the
only shareholder, he can issue to himself a dividend and pay income tax on
that amount when it hits his personal account. Or he can take the money as a
loan, and delay those taxes until later. Or his production company can "invest
in real estate" by buying the house and renting it to him for dollar a year.

Celebs are not people. They are businesses.

The people who really get shafted on taxes are the like of professional
athletes. The services they render their employers occur at very fixed times.
They don't get to spread their income over decades as entertainers do.

------
pcurve
"The Treasury forecasts that the tax will generate £275m in 2019-20, rising to
£370m in the following year.

It then expects that digital services tax receipts will reach £400m in 2021-22
and £440m the year after. "

Smaller amount than I expected, but still a good chunk of change.

------
djhworld
One thing that will be interesting around this is any future trade
negotiations the UK has with the US, especially after we leave the EU.

This tax will target the US giants.

~~~
mcintyre1994
Agreed - it's scheduled for 2020 and it looks like it's just on the books to
be negotiated away in that deal. Not a bad idea though, it's a free concession
that they didn't have before.

------
theptip
This looks like it is on gross sales? If so that would hurt low-margin
companies quite a lot; I imagine Amazon would be essentially forced to
increase prices by 2% for example.

~~~
martinald
The problem is for highly global, IP based companies it is very difficult to
tax profits.

You can just create a 'cost' (platform license fee, trademark cost) in another
sister company (that is in a low/no tax jurisdiction) and charge it to the UK
based one that is equal to the profit. Boom, no profit due to tax.

Not really sure what the best solution is. The UK isn't really big (or
competent, depending on your outlook) enough to make tech giants like the US,
so tech US companies dominate.

This has led to a massive outflow of tax revenue to these US giants. Eg, most
advertising revenue pre internet would have stayed in the UK and been taxed in
the UK. Post internet it is all flowing out to Facebook, Google et al who pay
close to zero UK tax on tens of billions of (very high margin) sales.

~~~
mattmanser
We've had 6 tech companies breakthrough billion $ threshold this year.

We're the biggest tech company creator in the EU.

Sounds more like you've got a small (or incompetent, depending on your
outlook) source of information.

 _In the past year, the UK has added six billion-dollar tech companies worth
$12.4 billion to its club of 26, more than any other European market, and has
produced the highest number of billion-dollar companies in Europe since 2000 –
contributing $64 billion to Europe’s $240 billion ecosystem of billion-dollar
tech companies_

[https://www.information-age.com/tech-titans-europe-end-
big-t...](https://www.information-age.com/tech-titans-europe-end-big-
tech-123473280/)

~~~
martinald
Not talking about market capitalisation. Talking about profits. The UK doesn't
have anything on the scale of FAANG generating enormous (taxable) profits. We
are literally 2 orders of magnitude off.

------
rb808
Any supremely-profitable industry is bound to be taxed sooner or later, esp if
its foreign.

I haven't seen any details though. Is it a % of ads sold? Or some other
mechanism?

~~~
pbalau
It's going to "happen" in 2020. Plenty of time to change their minds...

------
vorticalbox
It's nice to see they can plan a road map for tax but for brexit....

It sounds good but something tells me it will end up increasing prices for
consumers.

~~~
rtkwe
They did have a plan for Brexit but I think it amounted to 1) eat cake 2)
still have total access to mainland Europe's cake markets too.

On a more serious note a tax plan is easier because the government only has to
negotiate with itself while Brexit actually involves outside countries who are
disinclined to give the UK a cushy deal.

~~~
vorticalbox
I know it's different things but at least this has a road map of what is
planned and when by.

------
scotty79
Why would that bother anyone but the customer? Tech giants will just add it to
the tab.

People have no idea how much digital service is worth so if they want it, they
pay whatever is the price. I don't think 2% (or even 10%) price hike will
cause them to not advertise online their one simple trick to improve health of
your joints. What are they gonna do? Print newspaper ad?

~~~
Aqua
And how would that work? Google and Facebook could charge more for ads which
impacts mostly the advertisers, Amazon could in fact increase the prices
impacting average Joes in the UK, but they would lose the advantage over
smaller competition unaffected by this kind of tax. This is a globalisation
tax that would most likely not affect "normal" people while still bringing
quite a few pounds to the national budget.

~~~
bbbobbb
> Google and Facebook could charge more for ads which impacts mostly the
> advertisers

How does that work? There is no level of indirection after which the money
somehow comes from some magical place. This is still paid for by the consumers
in the end. Somebody pays for the ads and the cost of that is factored into
whatever the ads are for.

~~~
candiodari
You cannot explain to the "tax more" crowd that tax can only ever confiscate a
part of existing economic activity. I don't know why, it's a perfectly simple
and straightforward argument, but their argument is just "x pays a%, y pays
b%, why doesn't everybody pay max(a, b)% ?". It's jealousy, really.

Now that's not to say there isn't merit to both sides of the argument that
some level of tax is too little and some level is too much. But not in the UK.
The UK is firmly in the tax too much camp, as is most/all of Europe.

If I want to pay someone to, say, be my lawyer. And the person I hire for that
wants an iPad, then of every 1GPB I pay to the lawyer, 23 cents ends up as
revenue for Apple (making revenue for apple is WHY that person wants to be my
lawyer, in other words, it's the reason for there to be any economic activity
at all in this relationship). 77 cents ends up in the governments' hands to
spend (of which, I might add, the government spends about 104 cents). That's
... just not reasonable (and also why every UK company lawyer has to defend
all the executives for free to keep his job, to cheat this system)

------
bcheung
Discrimination aside, isn't the UK providing the favorable tax haven to begin
with (Double Irish)?

Also, how is revenue classified? If someone buys ads on Facebook do you now
have to count and prorate clicks based on where the user comes from?

And now with GDPR (or whatever the equivalent is in the UK) What if the user
does not accept tracking where they come from? Then there's the clause that
says the business must track the minimum needed to comply with tax law even if
the user does not opt in. So there goes privacy.

Seems like there are a lot of laws that contradict and negate each other. What
a mess.

~~~
deergomoo
> Discrimination aside, isn't the UK providing the favorable tax haven to
> begin with (Double Irish)

The Republic of Ireland is not part of the United Kingdom

~~~
neffy
That´s not... exactly... what was being referred to.

[https://en.wikipedia.org/wiki/Double_Irish_arrangement](https://en.wikipedia.org/wiki/Double_Irish_arrangement)

~~~
amaccuish
I'll repeat the parent.

"The Republic of Ireland is not part of the United Kingdom "

The Double Irish arrangement refers to the Republic of Ireland, a separate
country to that of Northern Ireland, both of which can be found on the island
of Ireland.

------
ucaetano
TL;DR:

Uk wants to pass a new sales tax, that applies only on "established tech
giants" that generate "at least £500m a year in global revenue" of 2% of sales
made in the UK.

~~~
walshemj
Revenue tax not sales tax maybe you should have read it.

~~~
ucaetano
Revenue = sales = top-line.

~~~
walshemj
That's not what a "sales" tax means a sales tax is levied on the consumer not
on the turnover of the company eg VAT in the UK and the various "sales" taxes
you have in the USA.

------
fredley
Good. It is becoming more and more apparent that there is a toll on society
created by these companies. They have a negative impact on our domestic
businesses (traditional brick and mortar, as well as home-grown digital
businesses) not to mention our mental health and even democracy. By taxing
them, hopefully we can go some way to reversing some of that damage (although
I'm less hopeful of that...).

~~~
nine_k
So you see it as a tariff? Do not let the more efficient foreign player in, to
let the local equivalent develop?

Economically it does not make sense, if we are looking for a _global_ optimum
(literally); this is the standard free-trade argument.

It may make sense if there's no global trust; you don't want to depend on
products of a potential unfriendly party, or let them have a large foothold in
your economy, just, well, in case.

But here I (also) see the desire to milk a cow that can be milked.

~~~
abainbridge
I take your point, but I think you've over simplified the situation. For
example, in days gone by, the UK tax system happily forced retailers to pay
vast amounts of tax ("business rates") based on the shops they occupied in
town centres. This was part of the total tax burned on retailers. Online
retailers avoid this tax and thus could be considered to have an unfair
advantage over bricks-and-mortar stores.

~~~
racingmars
Yes, excellent point. It's not correct to say a company is more "efficient" in
the market simply because it can undercut another company due to being taxed
differently. If the global companies are able to still compete effectively
while paying the same taxes, then they are still welcome to displace local
businesses.

------
tinktank
The same country that will not lift a finger to stop money laundering from
around the globe, being used a the basis for offshore tax havens, and non-dom
shenanigans will quickly do tax to the hilt.

~~~
mexicanandre
Yeah fair call this. Their property market is essentially black money bank.

------
dmmalam
[https://twitter.com/hmtreasury/status/1056942074271072258](https://twitter.com/hmtreasury/status/1056942074271072258)

------
andy_ppp
I’ll remind every person here that you are taxed on your revenue, not your
profit. It’s worth thinking about because it’s not always been the case in the
past that companies had more rights than individuals.

~~~
djrogers
That's actually not the case - expenses related to earning your income are
usually (with a few notable exceptions) deductible. Also, capital gains are a
real thing, and you are taxed on realized gains - not the full amount you sold
for.

~~~
philjohn
If you're employed in the UK there's very little you can deduct - mostly it's
salary sacrifice arrangements like pension, childcare vouchers etc. The only
real deductible I can think of at the moment is mileage allowance, and since
very few people do anything but commute to and from their place of work, they
can't claim that. It's only if you're a salesperson or area manager driving
your own car.

If you're self employed however the picture is a little different.

------
MrZongle2
When thinking about the UK rolling out new taxes, this inevitably comes to
mind: [https://youtu.be/pmgcylAxjfY?t=118](https://youtu.be/pmgcylAxjfY?t=118)

------
nickdothutton
The reality is that the large US tech giants this is aimed at are essentially
mercantile companies. Paying little or no UK tax on significant UK revenues,
which are then remitted via tax efficient structures to the US parent. Profits
are a Will-o'-the-wisp which appears and disappears in whatever tax
jurisdiction is most efficient at the time. For this reason I don't see
corporation tax (which is <10% of total tax receipts) being something future
governments can count on (unless that government is home to the mercantile
company). TLDR: Find somewhere else to get the 9%.

------
swayvil
Gotta pay for the Brexit fuckup somehow.

------
user5994461
I was scared for a minute. I thought this was about taxing consumer for
accessing internet.

It's fine. It's about taxing giant corporations who are evading taxes.

~~~
chrisseaton
They aren’t evading taxes. If they were evading they’d be prosecuted rather
than a new tax being introduced. They’re avoiding. Like we all do with our
ISAs and pensions.

If you misuse the terms it makes it harder for everyone to talk precisely
about the issue.

~~~
eertami
>Like we all do with our ISAs and pensions

I think it's a bit disingenuous to suggest it's like that, because the average
person is not worth hundreds of billions of dollars.

Sorry but you cannot in good faith compare the impact of tax avoidance by
Amazon to an individual's pension.

The problem really is that the loopholes are inaccessible to regular small
businesses. A lot of small companies _do_ pay a fair level of tax which makes
it difficult to compete with a company that doew not.

~~~
chrisseaton
It’s fine to debate morals.

But it’s important to make a distinction between legal and illegal.

You’re accusing them of having a different opinion on a moral isssue to you.
That’s one thing. Accusing them of doing something illegal - that’s something
else. And it’s now super clear that it’s legal, since we’ve decided we have to
introduce a new tax to tax them.

My issue isn’t with the debate - it’s about being precise. If you say
everyone’s evading then you ruin the power of really saying someone’s evading.
You’re crying wolf.

~~~
Joe-Z
I don't get it. On the one hand you say you just wanted to make clear the
distinction between the two terms, on the other you claim when facebook and
Amazon are avoiding taxes that's the same as when ordinary people try to save
for retirement.

If you didn't want to be quoted on that you shouldn't have put that comparison
in.

~~~
chrisseaton
I don’t mind being quoted on anything.

It’s either legal or it isn’t. For one you can prosecute, the other you can
only criticise. It doesn’t matter if it’s a single person or a massive
company. Either we have made the solemn decision as a country that it is
prohibited with the force of the state punishing you, or we haven’t. It’s a
huge difference.

Think about it like this. The next time someone is really evading tax and you
call them out on it people will think ‘oh well nothing we can do about that
without new laws’ because you’ve conflated it with avoidance this time.

~~~
Joe-Z
Look, we disagree on how tax avoidance should be dealt with on a personal and
a corporate level and that‘s fine. But you‘re constantly conflating a valid
point (which is a proper distinction between the two terms and which I agree
with) with your opinion on the matter.

If one were less charitable you could call that a strawman.

------
swarnie_
I give it 20 minutes before one of the big accountancy firms find the (totally
unintentional) loop hole to evade this tax.

~~~
jimnotgym
It's getting much harder since you have to register tax evasion schemes now...
But probably yes.

In the other hand I can't believe it is expected to raise so little.

~~~
mathieuh
Tax _avoidance_

I imagine if you registered your tax evasion scheme you would receive a knock
at the door in short order

------
stephengillie
They'll probably back down when companies threaten to leave. Like Amazon did
when threatened with the Head Tax. Or how Dole left Hawaii.

~~~
mr_toad
It’s just another sales tax. Amazon already deals with hundreds of different
tax rates in different jurisdictions. They’ll just price it in.

~~~
OJFord
Amazon's not always the cheapest as it is. If it prices it in, then
competitor's start to look more attractive; which is exactly the point.

------
davidhyde
I wonder if the recent "link tax" forced into the proposed EU copyright
legislation has something to do with making this "digital tax" work in
practice. Wouldn't be the first time that copyright law is used for something
completely different to what it was meant for.

~~~
walshemj
Nope its on faking low profits aka tax avoidance

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jedberg
This will only hurt the people who live in the UK. Those companies will just
raise their prices to cover the tax. Sure maybe the local companies could then
undercut Amazon if they somehow don't have to pay the tax, but eventually
they'll just raise their rates to match because why give up the profit margin
if they don't have to?

It doesn't matter anyway, the tax will never happen. They're just using it as
a point of negotiation for a new US trade deal after Brexit.

~~~
pastor_elm
>Those companies will just raise their prices to cover the tax

How exactly will Facebook raise prices in a way that it will hit the average
consumer?

~~~
dragonwriter
> How exactly will Facebook raise prices in a way that it will hit the average
> consumer?

The average consumer is also a worker and depends on an employer that will be
paying higher advertising costs for the same benefit.

~~~
cma
And now %X of that cost will return to the economy instead of going overseas.
Ad costs should stay roughly the same, since they are the result of bidding.
It's not like Facebook leaves $2 on the table and says we'll keep that there
for you guys unless we get taxed.

When something has near zero marginal cost, it is all just about demand. The
only scarcity is caused from other bidders.

Why should a country send %X margin on all of their consumer products overseas
(via ad costs) to someone who is selling their own citizens' content and
capturing the users/locking them in with network effects? There is a lot of
innovation at Facebook et. al., but they get a massively outsized portion of
the network's value when you compare what they put in vs. what users are
putting in.

Where it could hurt would be a service that can barely break even using ad
revenue and goes under as a result. But for big corps with network-effect
lock-in in their segment, it seems like a net win for any country that does
this.

