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Thursday, 18 June 2020 18:21

It looks like Australia's bid for a digital tax may not get very far

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It looks like Australia's bid for a digital tax may not get very far Image by Gerd Altmann from Pixabay

The chances that Australia will be able to impose its will on digital giants Google and Facebook, as far as getting them to pay for using news from local outlets goes, appear rather slim, with indications that the US Government may pressure the Coalition to back off.

According to a Reuters report, Washington has pulled out of talks with European countries over a digital tax, claiming that there has been no progress.

Both Facebook, which gave an insolent reply to the Australian Competition and Consumer Commission regarding its proposal on a mandatory code for payment, and Google, which has also effectively told Canberra to take a walk, know they have support from the big boys in power.

France had already decided to impose a 3% digital services tax when the US started threatening retaliation in the form of tariffs. This month, Washington opened an investigation into this tax, and also those announced by Britain and Spain, claiming that they target American companies.

But US Treasury Secretary Steve Mnuchin has now said in a letter that the US was withdrawing from the talks which he claims have made no progress.

French Finance Minister Bruno Le Maire has made some brave noises after the US pullout. He has been quoted as saying: "This letter is a provocation. It’s a provocation towards all the partners at the OECD when we were centimetres away from a deal on the taxation of digital giants.”

And he promised that whether the US returned to the talks or not, France would go ahead with its tax. Sure, one would like to see that.

The Trump administration has made lots of crazy threats during its time in office, including one to impose tariffs on German cars, calling them a threat to US national security.

Given this, one cannot rule out some equally crazy threat to Australian Prime Minister Scott Morrison, asking him to fall in line, or else. Pardon me, I err; it will not take much convincing for Morrison to wave the white flag when Trump calls – we have seen plenty of instances of him taking out the rubbish for Trump since he took office.

And remember, the US presidential election is on 3 November. Trump is desperate to get back for another four years and both Google and Facebook, apart from being big contributors to the campaigns, can also influence things through their platforms.

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. One has to pity ACCC chairman Rod Sims, who has, no doubt, put in many late nights in trying to draft a code that would result in squeezing money out of the freeloaders.

If Google and Facebook can be made to actually fork out money, there would be reason to celebrate. But I'm sure that it would be easier to get blood out of a stone.


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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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