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Monday, 22 October 2018 10:52

Taxing big tech based on revenue is an excellent Treasury idea

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Taxing big tech based on revenue is an excellent Treasury idea Pixabay

The Federal Government has an excellent chance to do itself a favour and also gain some good karma by taking onboard a suggestion by the Treasury to tax big multinational technology companies based on their revenue. It would help the budget bottom line and represent some actual policy for a change.

Admittedly, the idea is not a new one, having been already floated by the European Commission, the executive arm of the European Union.

Just yesterday, German Finance Minister Olaf Scholz said he backed a global minimum fiscal regime for multinationals.

But there is no harm in following up on what is an excellent idea, to bring the cowboys of Silicon Valley into line.

In the case of the EC, a proposal was unveiled back in March to apply a blanket 3% tax on digital companies that had annual worldwide revenues of €750 million (US$925.6 million) and EU revenues of €50 million.

That the idea is a good one is borne out by the fact that it has got Google, one of the chief offenders, hot under the collar to the extent that it dispatched its chief economist, Dr Hal Varian, to Australia last week.

Dr Varian, no doubt, will attempt to massage opinion in Canberra to think the way Google does, after making the media rounds. He received largely sympathetic coverage in the Australian Financial Review, that august media organ that loves to cuddle up to corporations.

On the ABC, he waltzed through without any collateral damage, largely due to the ignorance of the host of the ABC PM program.

Prime Minister Scott Morrison was an aggressive advocate for getting tax avoiders to pay their fair share when he was treasurer. But after ascending to the role of PM, he appears to be more involved in marketing stunts to keep his government from falling apart.

Big tech companies — Google, Facebook, Amazon, Microsoft and Apple to name the big five — have been very good at hiding their actual sales by cooking the books and attributing them to other locations. Simple honesty has gone out the door and these tactics are actually considered clever.

The EU has the right idea and the fact that Australia is looking in that direction, and not, as it usually does, slavishly, in the direction of the US, is an excellent first step.

Inviting the EU competition commissioner Margrethe Vestager to visit Australia and deliver lectures all over the country on this very topic would be a good follow-up. She could educate the ACCC boss, Rod Sims, and Treasury officials as to how one should deal with companies whose one goal in life is to hide income through any means possible.

Regulators in smaller countries like Australia tend to be cowed by officials from big tech companies and go into their shells when confronted by them. Vestager has dealt with Google and Apple the way they should be handled, without a hint of fear or vacillation.

Ultimately, it all depends on whether the Morrison Government decides to take on big tech or not. That is the $64 billion question.

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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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