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.
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.