Austria’s ruling Social Democratic Party seeks to impose a “digital barter” tax on online services such as Facebook, Twitter, and Google.
“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,” explained Bloomberg’s Boris Groendahl. “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.”
The Social Democratic Party also plan to target internet companies by extending the tax on advertising revenue to “digital formats,” while they would also “tax purely digital services that are acquired by Austrian customers from companies with no physical presence in the country.”
Andreas Schieder, the parliamentary head of Austria’s Social Democratic Party, claims that the new taxes would close off a digital loophole.
“The business transaction that’s going on here is that users are paying with their personal data,” said Schieder. “The business model of those internet companies is based on massive revenues that are generated with the help of those data.”
“We need a new approach to make sure that taxes are paid where revenue and profit is made,” he continued, adding that “The OECD has made practical suggestions how to define digital establishments for tax purposes.”
Before these new proposed taxes are implemented, conservative Finance Minister Hans Joerg Schelling would also have to agree.