France is going to start charging foreign Internet companies taxes for revenues earned on their soil. It's going to cost Google and Facebook 3% of national revenues to continue operating in the country. Bam.
The take I read that stuck most about this news divided the commentary they had seen into a pair of camps. One held that tax revenue was the right of the creative economy, and that attempts to abscond with it amounted to little more than jealousy.
The other identified that the yielders of the revenue powering said tax were French. Why should France not be entitled to some of that $5b or so worth of fresh income?
This is a trade-war-engaging initiative, as the US will likely/possibly respond with an inquiry that condemns it (as threatening in the very least their stranglehold on global economic domination). Overall, the kinds of companies we're talking about here only pay about 8-9% tax on their profits in the EU, whereas a conventional business does so to the tune of 23%. But there is a danger. Unlike traditional globalisation, where supply chains are more transparent, the digital and data chains that power Internet businesses are not - at all. Putting tax at the wrong boundary is not unlike damming water coming down a mountain. It may give you a lovely power source but it could also flood the neighbouring village.
Taken as an incentive to appropriately find a way (together) to tax global digital businesses, this is a swift kick towards greater global economic cooperation.
Taken instead as a global assault on the US' sovereignty as supreme lord and master of the Internet company, it's a casus belli. Thank goodness global politics is nicely warm and fuzzy at the moment.
Yours in HAT,