

France plans 'Google tax' on Internet searches - mtkd
http://www.telegraph.co.uk/technology/google/6947706/France-plans-Google-tax-on-internet-searches.html

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karzeem
The core problem with this scheme is one that's endemic to this sort of
legislation. It's a basic assumption that economic interactions are all
ultimately zero-sum, which is simply untrue. The idea that Google (or anyone
else) must necessarily derive its success from somehow, somewhere screwing
people denies the fact that the healthiest economies are packed with non-zero-
sum interactions.

~~~
joubert
Taxation is also a tool to shape behavior.

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cwan
Not sure how this relates to what karzeem has said. You're right, taxation can
shape behaviour. So what do you suppose it's saying here? Let's tax and
discourage a productive part of society - or at least a part that helps people
get things done faster to subsidize an industry (that's already being
protected and promoted by government) that people are not interested in enough
to actually support with their own money?

Let's also not forget Quaero that the French tried to create as a
counterbalance to supposedly American centric search for a total estimated
amount of 293M Euros over 5 years! If the French government was that concerned
about certain favored industries, why not just put their money there?

~~~
joubert
I simply said that because he said the motivation from this proposed tax stems
from the misbelief of the zero sum game in wealth creation.

However, from the article it seems it is more a way to to stimulate certain
behavior (i.e. cultural developments).

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bokchoi
_The president is said to have been made keenly aware of the problems illegal
downloads pose musicians by his supermodel-turned-singer wife, Carla Bruni-
Sarkozy._

 _This may explain why the French first lady's producer, Patrick Zelnik, was
tasked with leading the commission, which came up with the proposals._

Wow, no conflict of interest there.

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tjic
I'm constantly amazed that France's economy is as good as it is, given how
much they love shooting themselves in the foot.

~~~
barrkel
Indeed. Most of the US's growth in GDP versus say the Euro 15 countries for
the past while has come from population growth. On a per-capita basis, the US
doesn't seem to be reaping much of the supposed benefit of its allegedly pro-
business system, though as you can tell I think there's a lot of meddling in
the US system too, with what appears to be legalized bribery of government
under a different name.

A blogger for The Economist had an interesting article today:

<http://www.economist.com/blogs/democracyinamerica/2010/01_0>

(On HN here: <http://news.ycombinator.com/item?id=1038226> )

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fleitz
This will lead the way so they can start taxing BMW and Mercedes to revive
buggy whip manufacturing. Truly visionary.

~~~
aarongough
Haha, very much along the lines of what I was thinking.

Isn't the idea behind capitalism that good businesses succeed, while bad
businesses fail? What happens when all of the bad businesses are propped up by
government subsidies?

^sigh^ whatever happened to letting the market decide...

~~~
joubert
The tax is to be levied irrespective of the (major) search engine used.

~~~
aarongough
But the money is still being used to prop up a market that cannot support
itself. If it was a vital service (like maybe a utility service) then I could
understand. But we are talking about the _music industry_!

~~~
joubert
But why should search engines be able to escape paying taxes on their
advertising revenues, while the music industry must pay taxes on their
revenues?

~~~
aarongough
You keep saying the same thing again and again. It's still not correct.

The companies that own the search engines are _already_ paying tax on their
advertising revenue. See other person's comment above.

~~~
joubert
But they're not paying tax in France, where, one can argue the advertising
revenue originates as and when the user clicks on the ad since it is only then
that the good is considered delivered (very different from traditional
advertising).

~~~
aarongough
One could argue that. But advertising is a product. If I sell a product to a
person in France from my Canada based company, I do not have to pay taxes on
that revenue in France.

Why should this case be any different.

~~~
joubert
Depends on where the sale is made (and in this case it would be hard to argue
the sale is being made in Ireland, no?), and how residency is determined.

The origination of revenue concept, residency, etc. in tax law is continuously
being tested, both by governments and by companies, in a tug of war.

Consider this case of affiliate advertising (which, although different in
specifics from the French case, has the same tone and a similar legal path):

[http://venturebeat.com/2009/04/24/california’s-proposed-“ama...](http://venturebeat.com/2009/04/24/california’s-proposed-“amazon-
tax-–-bad-for-california/)

In particular, this bit: "Here’s how it would work: If you have a web-based
business in California and collect revenue by showing out-of-state companies’
ads on your site, Bill AB178 will claim that both you and the businesses you
advertise on your site have residence in California, and are therefore
required to pay California sales tax. For example, say your Santa Monica-based
web site shows banner ads for Amazon.com. With Bill AB178 in place, Amazon.com
would be classified as a California-based business based on the fact that your
business draws affiliate advertising sales revenue. Amazon would then be
required to collect sales tax on all sales into California. The idea behind
the bill is that California could force out-of-state retailers to collect and
pay California sales taxes."

You can also read more about it here:
[http://www.amazon.com/gp/help/customer/display.html?nodeId=4...](http://www.amazon.com/gp/help/customer/display.html?nodeId=468512)

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alain
Also in France we have a tax on CD-R, DVD-R, hard drives, mp3 players which is
given to the music companies to compensate their losses from pirating (you pay
that tax whether you pirate or not. And still haven't the right to pirate
after paying it).

The ISP also give 1% of their income to those companies.

So yes I think taxing the search engines is the logical next step.

~~~
aarongough
Wow. I remember reading something about that a while ago but I didn't realize
it was that bad...

The next logical step is that the government forces you to listen to 4 hours
of music a day, and pay for it, so that _flagging creative industries_ are
supported...

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joubert
Aren't they just simply proposing to tax online advertising revenue? What's
the big deal?

~~~
aarongough
The big deal is that they're planning on using the money generated to support
creative industries that _are harmed by digital innovation_. ie, the music
industry.

~~~
joubert
But the music industry gets taxed on their revenue, no?

If so, shouldn't the search engines be taxed on their advertising revenues?

~~~
aarongough
As per the comment above: they are already taxed on their advertising revenue.

~~~
joubert
But they don't get taxed in the jurisdiction where the revenue originates (as
and when the user clicks on the ad).

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zosi
What you're saying is that if I click on an ad, and that click results in a
company in a completely different country paying another company in another
completely different country a certain sum of money, that my government should
be able to tax that? There is no money entering or leaving France when a
French person clicks on a Google ad. The French government has no business
whatsoever trying to tax online advertising revenue that occurs due to
transactions in other countries.

~~~
joubert
Aren't the ads displayed in a particular country from companies that operated
in that country? When the user clicks on the ad the (French-based) company is
charged by Google (i.e. the company advertising has now transacted, and
according to tax origination principles, most likely that would be interpreted
as having occurred in France).

See my other comments in this thread about the Amazon advertisers cases in
California and New York, for a similar situation.

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wendroid
This is a very interesting subject. Countries in the EU have competed to
provide a better business environment to foreign companies. Eire has gone for
the 10% corporation tax break. Other EU countries are threatening the
companies with sanction. Witness the recent story concerning Google's UK tax
bill:

<http://www.timesonline.co.uk/tol/news/uk/article6122329.ece>

Google avoids £100m UK tax "The website hailed as a ‘paragon’ is accused of
adding to the public’s burden."

Google's advertising first, then Facebook's (er, pardon - Livre de Visage's),
then Reddit's (LuLui's) self service ads.

To then dish it out to non-profitable ventures is astonishing, it's like the
levy I had to pay on C60 tapes to save my programs, or the levy in some
countries on blank CDs and DVDs that goes into the publishing pot.

Then again, I get money from the Lottery Fund and I've never bought a ticket
so I should shut up :)

