The French-led push fits into broader European efforts to rein in Silicon Valley companies, ranging from a $5 billion antitrust fine against Google to ongoing investigations into Facebook’s data practices. The large tech firms have so far responded by ramping up their lobbying efforts in the European capital, while U.S. Treasury Secretary Steven Mnuchin has warned the Europeans against jeopardizing tech investment — although so far Washington has stopped short of bringing the digital tax issue into its argument with Brussels over trade. [...]
While Paris claims to have the backing of 19 countries including the United Kingdom — whose chancellor, Philip Hammond, has pledged to “go it alone” on such a tax — it’s far from garnering the unanimous support needed for the measure to pass. A group of countries led by Ireland and including Estonia, Sweden and the Czech Republic remains strongly opposed.[...]
Tech firms’ opposition to the tax plan is due mainly to its long-term implications rather than any immediate financial impact. Under the current proposal, which was put forward by the European Commission for consideration by EU states by year-end, companies with substantial digital operations in the EU — those generating more than €750 million in annual revenue — would be subject to the new tax. The Commission has suggested a tax of 3 percent on revenues would raise some €5 billion a year. [...]
The problem for tech companies has more to do with the fact that France, and many EU allies, want to enshrine the idea of taxing value added from the collection and deployment of personal data for advertising — in other words, the engine at the core of Facebook, Google, Twitter and, increasingly, Amazon’s wildly successful business models. A European tax on data could prompt other countries to impose similar measures — just as Japan, South Korea, South Africa and a slew of other countries have imposed their own variations of Europe’s far-reaching data privacy rules.
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