What has been going around for a few weeks as a rumour, has finally made it on paper: the European Commission wants to give the EU Digital Tax another go.
This time in the disguise of the Recovery Fund. In times of crisis, any additional source of income is a good one and taxing big tech has always had its appeal among policy-makers. Only that revamping the EU digital tax – while the OECD is still working on a global solution – will hit businesses that are already suffering from the economic impact of the Covid-19 crisis disproportionately. This is, for example, the case of communications agencies that are struggling with the effects of plummeting consumer confidence, industrial production in decline and ultimately heavily reduced advertising spending.
Instead of looking for solutions that kick off demand again and help companies get back on their feet, the Commission giving in to all too familiar governmental reflexes: introducing a new tax (or rather taxes). European Association of Communication Agencies (EACA) members have anticipated this reaction and already wrote to Commissioner Gentiloni back in mid-May urging him not to succumb to pressure to put the digital tax back on the table and not to put it into the “recovery fund”.
Not only would such a tax have a direct impact on agencies, it would also lead to an indirect increase of fees for placing ads online – a cost that is rarely borne by, e.g. the platform where the ad is placed, but rather passed down the supply chain. Agencies would suffer twice.
Read in full: EACA letter to Commissioner Gentolini on Taxation .
To date, EACA is still waiting for a response from the European Commission.