News & Politics

Austria Looks to Tax Google Search, Other Digital 'Transactions'

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In this day and age of innovative technologies and new means of communication, the tax man must use his imagination to come up with original, exciting ways to separate the citizens from their hard-earned money.

Austria may have hit upon a brilliant scheme that takes the business model of digital companies like Google, Twitter, and Facebook and transform using those platforms into tax revenue.

Bloomberg:

The most ambitious part of the plan targets the business models of Twitter Inc., Google or Facebook: The tacit pact under which searching, liking, posting and tweeting remains free as long as users let the companies feed usage data into algorithms that help tailor advertising that can be aimed at the most likely buyers.

That arrangement is a form of bartering, and a value-added tax could be imposed on such transactions just as the levies are extended in other parts of the economy, said Andreas Schieder, the parliamentary head of Austrian Chancellor Christian Kern’s Social Democrats, which govern in a coalition with the conservative People’s Party.

“The business transaction that’s going on here is that users are paying with their personal data,” Schieder told journalists in Vienna. “The business model of those internet companies is based on massive revenues that are generated with the help of those data.”

You can see tax officials all over the world getting dreamy looks on their faces after reading that.

As a practical matter, how will these “transactions” be measured and counted? No doubt the government would demand that the companies keep detailed records of each search, each tweet, etc. to ensure compliance. Is that really possible?

To the technically challenged like me, this sounds like a huge burden will be placed on digital companies, perhaps causing them to rethink their “free” services. In the end, it’s not about tax revenue as much as it is about controlling the internet. Such a policy could lead to a loss of innovation, which in an industry that thrives on cutting-edge advancements might affect the online experience for consumers.