The case against tech taxes

This report from the UK think tank EPICENTER makes critical assessment of EU plans for taxes on digital turnover.

This paper explains why additional taxes on the turnover of companies with a large digital presence would be disproportionate, discriminatory and damage the European economy. They would further complicate the tax system for no obvious benefit, but substantial costs. The European Commission has proposed a new set of EU-wide taxes on the activities of digital companies. In the meantime, several national governments have announced plans for their own taxes targeting the tech sector. This paper reviews the Commission’s proposals and the state of play in four individual countries – France, the UK, Italy and Spain – drawing on the local knowledge of think tanks in each case. The proposals for digital services taxes appear to be driven more by politics than by a proper assessment of the economic and fiscal implications. It would make far more sense to reduce existing distortions in the tax system instead of adding new ones. Politicians should also seek to correct public misunderstandings about the economic burden of taxation, instead of reinforcing and exploiting them for short-term electoral gain.

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