Adopted by Parliament last July, the GAFA tax is designed to provide more tax justice. But the effects of taxing the digital giants would prove more complex than it seems.
The GAFA tax, a symbolic or really effective measure?
This is one of the measures prepared by Bruno the Mayor the Minister of Economy in response to the request for tax justice emanating from the yellow vests movement. The GAFA tax – Google Amazon Facebook Apple – tax any digital company on its turnover when it exceeds the bar of 25 million euros in France and 750 million internationally. Assimilated with a tax on the production because it is calculated upstream of the profits, it is like a brake on the activity of these companies which employ thousands of people in the hexagon. By fetching 3% of the turnover of these digital juggernauts, France creates an umpteenth tax on businesses that ultimately weigh on consumers. Because the Google, Amazon, Facebook and Apple have already indicated that they would immediately pass the increase in taxation across the chain: the prices of their products and services will be increased, suppliers will suffer strong pressure on margins, employees can see their pay frozen … In short, add a new tax on business creates a negative chain reaction that impacts everyone, for the arrival touch the consumer final, the very one for whom the tax was originally conceived. What's more, is tax justice really at the rendezvous of this tax? Not really because GAFA is already taxed at 24% of their global profits; which is higher than the average taxation observed in the OECD.
Towards a trade war with the US?
Of course, the GAFA tax did not go unnoticed in the United States, home country of the digital juggernauts. If they said they would pass on the cost of the tax to the end consumer, the US administration has hardened the tone. A sharp rise in customs duties on many French imports is very seriously envisaged, with iconic products such as wine. Bad news for a whole chain of craftsmen, producers and traders with all that it can generate negative in terms of slowing down the commercial activity. Especially since French wines are already experiencing tough international competition; drastically increase customs duties would make them lose the round. The GAFA tax can thus trigger a trade war with the United States, which France would do well, especially in these times of weaker economic growth than expected. And this tax would also be penalizing for a wide range of economic actors, from subcontractors to suppliers through resellers and finally consumers who were nevertheless in demand for an increase in their purchasing power.