BRUSSELS, Dec 5, 2018 (BSS/AFP) – A top EU official Tuesday said the fear
of retaliation by US President Donald Trump has blunted Germany’s ambition
for a European digital tax, with Paris and Berlin now proposing a scaled down
version.
On Tuesday, France and Germany tabled a new plan that would see a three
percent tax imposed on advertising sales on tech giants such as Google and
Facebook, instead of the far wider scope of a doomed earlier proposal.
Paris believes a digital tax on the Silicon Valley behemoths would be a
vote-getter for mainstream parties ahead of European Parliament elections
next May in which anti-EU populists are expected to do well.
“Until now there has lacked a clear commitment by the Germans,” said EU
economics affairs commissioner Pierre Moscovici after talks in Brussels.
“There’s an elephant in the room: the fear of trade reprisals by the Trump
administration that might consider a tax as a protectionist measure against
US high tech giants,” he told reporters.
Germany especially fears damaging tariff hikes on vehicle exports to the
US and top executives are expected in Washington on Tuesday to try to appease
Trump and head off a trade war.
The digital tax initially was to cover a wide swathe of the digital
economy, potentially capturing companies such as Amazon, AirBnB and Trip
Advisor.
In the watered-down proposal, the scope of the tax would be largely
limited to ads on Google and Facebook, which dominate the online advertising
market in Europe and around the world.
The tax would only come into force in 2021 if a plan for a global solution
being negotiated at the OECD is not agreed before then.
“I prefer to check our ambitions (…) We have adopted a more conciliatory
attitude,” French Finance Minister Bruno Le Maire told journalists after the
meeting.
Le Maire’s struggle was against Ireland and a group of mostly nordic
countries that has furiously resisted an EU-only digital tax.
The new proposal, which requires unanimous backing by the EU member
states, is set to be formally put for approval by ministers in March.
“I continue to have strong, principled concerns about this policy
direction,” Irish Finance Minister Paschal Donohoe told his counterparts.
Fair tax campaigners were furious at the clipped ambitions by Paris and
Berlin.
“The new Franco-German proposal is only for political show … to keep up
appearances,” said MEP Eva Joly, who tracks tax evasion issues for the Greens
party.