Germany is delaying the adoption of the google tax and thats a good thing

While France and Spain are heavily lobbying for the adoption of a “GAFA” tax (Google, Amazon, Facebook and Apple), also known as “Google tax”, Germany has chosen a more careful approach. Rightfully so.

French finance minister Bruno Le Maire began his move towards what was then known as a “digital tax” (now also called “tax on digital presence”, for mere accuracy) in autumn last year. Le Maire had run a centre-right primary campaign for France’s Republican party as a fiscal conservative, but seems to have found the social democrat within him since he joined Macron’s government.

Describing it as a matter of “fairness”, France’s finance minister Bruno Le Maire has called for European unity on this issue. During the Estonian presidency of the European Union, Le Maire gathered finance ministers to gain support for the proposal.

However, ministers from Denmark, Sweden, Malta, Ireland, or Luxembourg quickly showed opposition, suggesting that such an idea should be taken up at the OECD level. Critics claim that the move could be seen as a further punishment on U.S firms, as most companies affected would be American.

Back in September 2017, Danish finance minister Kristian Jensen said: “I’m always sceptical about new taxes and I think that Europe is taxed heavily enough.” Malta’s finance minister Edward Scicluna expressed his hopes that “this is not another financial transaction tax”, knowingly that he publicly and vehemently opposed the latter as a member of the European Parliament.

Luxembourg’s Pierre Gramegna showed more initial opposition, which has since drowned out: a move that could be related to Luxembourg Prime Minister Xavier Bettel’s ambition to an EU top job after the Grand-Duchy’s election next month.

In administrative court rulings in July 2017, the tech success story Google had escaped a €1 bn bill by the French taxman. The court had ruled that the U.S company could not be taxed on the activities of its service AdWords, since it has no “permanent establishment” in France. This is what sparked the original reaction in Paris, which is now, given the proximity of the European elections in May, even more pressing for the government.

In an attempt to vouch for the tax which seemed rather desperate, French minister Bruno Le Maire brought up Emmanuel Macron’s win against the far-right in France, as a reason to accept the reform.

In any way, this bargaining tactic could drive up one bill, and that is the one of the European Consumer. Very often, increases in company expenditure in indirect taxes, which this would inevitably imply, would raise prices for consumers around the continent. VAT has long been recognised as the tax which hits poor people the hardest, yet many EU countries now prefer to introduce higher levels of indirect taxation.

Just at a time when especially low-income earners can have simpler access to many products because of the internet, it seems cruel to restrict their purchasing power.If people such as Bruno Le Maire want to talk about fairness, then they should first address the unfair situation of those people who cannot support indirect tax increases. If we care about those with low wages, we need a more competitive marketplace in which companies are in a price race, not a race to optimise astronomical tax burdens.

Meanwhile, German finance minister Olaf Scholz is now known to be deliberately delaying the progress of the tax. A confidential document from the German Federal Ministry of Finance, which is quoted by the German newspaper BILD, condemns the “demonisation of the large internet companies”. This has supporters of the tax up in arms, because of course, opposing an idea that they just came up with a year ago must mean that a person is owned by big digital.

Scholz is not even delaying it to avoid because he disagrees with it on principle, as his social democrat party affiliation would probably suggest, but more by pragmatic considerations. German carmakers could suffer from retaliatory tariffs from the U.S, if president Trump were to see the tax as an attempt to increase the level of European protectionism. After all, EU leaders are constantly using the fact that there is no European Google, Apple, or Facebook, continuously in their statements.

It is unlikely at this point that any agreement can be reached until the European elections in May, and that is also thanks to the delays be minister Scholz. The future of Europe’s market economy undeniably lies in the digital sector. The idea of attempting to massively tax online businesses is not a promising objective, neither for the states nor their consumers. It belongs in the dustbin of creative political EU integration.

Originally published at https://www.vocaleurope.eu/germany-is-delaying-the-adoption-of-the-google-tax-and-thats-a-good-thing/

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.

Scrap the Diesel car ban

Bill Wirtz says that rather than tightening restrictions on Diesel cars we should be relaxing them.  

A court in Wiesbaden ruled last week that local authorities in Frankfurt must ban older diesel cars as part of efforts to clean up air quality. Much like earlier bans in cities like Stuttgart, the ban is taking place under questionable lobbying circumstances and denies consumer choice.

Diesel engines have come under fire in recent months for their pretended effect on public health. Environmental activists had been working for years on outright bans for circulating diesel cars, pointing to its health effects in comparison to other combustion engines. The science on that is questionable.

Former President of the German Pneumology Society, Doctor Dieter Köhler, contradicts these activists and sees only a minor health-endangering role in particulate matter and nitrogen oxides. Many studies would be misinterpreted findings, and the costs of outlawing diesel vehicles would stand in no proportionate relationship to health hazards.

The Canadian government also agrees with this assessment. It writes: “Today’s diesel vehicles are cleaner, quieter and perform on par or better than their gasoline counterparts. The improvements result from the availability of cleaner fuels and the use of advanced technologies, including electronic controls, common rail fuel injection, turbocharging, sound dampening and exhaust emission reduction components.”

The Society of Motor Manufacturers and Traders (SMMT), which represents motor-vehicle manufacturers (and other on that particular supply chain, independently of their productions), writes this: “Diesel is critical to reducing CO2emissions, which in turn is tackling climate change – diesel cars emit, on average, 20% lower CO2 than petrol equivalents. In fact, since 2002, diesel cars have saved 3.5 million tonnes of CO2 from going into the atmosphere.”

A noticeably stark contrast with the claims of Deutsche Umwelthilfe, which does accept that so far, only Volkswagen has been forced to admit to cheating on its emissions testing, however, “almost all other important manufacturers have been able to prove that their own measurements have in part shown massive exceedances of limit values. The results: 33 out of 36 diesel vehicles measured exceed the nitrogen oxide limits on the road, sometimes many times over.”

You won’t find Toyota amongst those named by Deutsche Umwelthilfe, because the group cashed in €80,000 from the Japanese manufacturer over the years. The fact that Toyota produces mainly petrol and hybrid cars and is likely to benefit from bans on diesel cars, particularly if they come in quickly, must of course be completely unrelated. In the meantime, their mentions of Ford should also make their fundraising department nervous, as it receives grants from the American ClimateWorks Foundation, which is mainly sponsored by the Henry Ford Foundation.

In July last year, the French government decided to ban all cars that run on petrol by 2040. Given that only 1.2 per cent of French cars are electric, only a harsh restriction of consumer choices and stringent sanctions can make that possible in the next 20 years.

In 2040, if we are still in need of cars running on fossil fuels, the ban would be disastrous and is unlikely to be implemented, and if we don’t need them anymore by that time the legislation would be obsolete. The pretense, however, that it is the role of government to choose winners and losers in the innovation of a free market, is ridiculous. Consumers can decide for themselves whether they want to get a diesel car or not, and it definitely shouldn’t be the role of environmentalist organisations to advance an anti-science narrative, only to satisfy their donors or an ideological base which is hungry for yet another ban on people’s lifestyles.

What is needed are legislative changes than loosen the current strict rules on diesel cars, which would prevent courts from outlawing them all together. If not the consequences for consumer choice, industry and jobs related to both manufacturing and tourism could be disastrous.

Originally published at http://commentcentral.co.uk/scrap-the-diesel-car-ban/

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.