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Monday, 20 April 2020 10:25

Taxing Google and Facebook: premature rejoicing could be in vain

Taxing Google and Facebook: premature rejoicing could be in vain Image by Gerd Altmann from Pixabay

Much is being made of the fact that the government has told the ACCC to draft a mandatory code to make Google and Facebook (among others) pay for using content from Australian news publishers. But has anyone thought of how the US Government would react to this?

The last time anyone tested the water on this front it was France, which passed a law in 2019 to levy a 3% tax on American digital companies. Reacting to this, the US threatened to hit French goods with a 100% tax.

The US Trade Representative also said it would investigate the digital taxes imposed by Austria, Italy and Turkey with similar tariffs likely.

The OECD is said to be working on a uniform tax for all countries under its rules and France has said it would pay back any excess if the OECD tax were to be less. But there has been no movement by the OECD on this front since then.

France's competition authority has now imposed a 3% tax on Google, based on a complaint from unions who represent French publishers. This is a preliminary ruling, with a final rule to be decided.

What would the Australian Government do if US President Donald Trump made a threat to impose tariffs on Australian exports in retaliation for any tax on the likes of Facebook, Google and Twitter?

Canberra is not exactly the most courageous entity in the world when the US starts indulging in threats. There is plenty of evidence to back up the fact that Australia will cow down and retrace its steps if this were to occur.

The US presidential election is in November and Facebook and Google make sizeable contributions to the main parties. Thus, there is all the more reason for Trump and his party to get involved — as indeed the Democrats — on the side of American companies.

Every action indulged in by Trump is geared towards making his re-election chances better so Australia's bravado may be coming at exactly the wrong moment.

News Corporation already has a deal with Facebook so what exactly it wants now is not clear. The Nine newspapers have a deal with Google, struck during the days when the papers were owned by the now defunct Fairfax Media. Again, it is not clear what more this company wants.

If Google and Facebook can be made to actually fork out money, there would be reason to celebrate. But I fear that this is all mere smoke and mirrors in a bid to kick the ball down the road, tactics that we have seen plenty of in the past.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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