Will the European Union’s New “Data Tax” Gain Traction?

Tax

A new “data tax” that is about to be proposed in the European Union has companies like Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), and Google (NASDAQ:GOOG) wondering what the future of their operations will look like in Europe.

France is looking to impose a data transmission tax on those specific four tech companies because of the way they dominate European Internet usage and are non-European — or American. According to the logic of the proposal, the dominance of these four companies prevent European start-ups from being able to rise up and compete with the larger, American giants.

Of course, as USA Today points out, the proposal doesn’t exactly make it clear how a new tax levied at these companies will steer users toward European alternatives.

The Wall Street Journal reported that a French member of the European Parliament explained the need for the data tax by saying that European nations have become ”just the puppets of financiers and multinationals.” And on the other side, Forbes put out the headline: ”Gibbering Nonsense From France About Apple, Google, Facebook and Amazon.”

The European Union’s tax plan would establish a new Internet regulatory agency empowered with leveling the playing field between the American tech giants and European competitors. French Technology Minister Fleur Pellerin told the Wall Street Journal that, by not having any regulations in place, the major companies are “blocking innovation from all of the other actors.”

The agency would also be tasked with tackling the subject of data privacy, which has become a point of contention as Apple, Google, Facebook, and Amazon have all released information to the U.S. government.

The data proposals are expected to be presented at the summit of European leaders in late October and it appears that, according to USA Today, the data tax is unlikely to move forward this time, as it’s unclear how a usage-based tax could be imposed. Pellerin told the Financial Times that that her agency is looking into data transfer, traffic, and interconnection in order to calculate how the American companies make their money.

Unsurprisingly, the proposal appears to have the support of European telecoms who built the physical networks that American companies enjoy low tax rates using. But in a new report by The Telegraph, it appears as though Great Britain will oppose the proposal, with one of the biggest reasons being the fact that the European Union does not have the power to issue taxes.

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