Amidst coronavirus, a national lockdown, and the formulation of a phased exit strategy, France is making waves with the enaction of a new digital tax, and is moving forward despite a lack of international consensus on the matter. Nearly 140 countries from the Organisation for Economic Co-operation and Development (OECD) are in the process of negotiating updates to tax rules in the light of the rise of global tech companies – namely Google, Apple, Facebook, and Amazon – that have come to define online digital experiences and often make massive profits by establishing their operations in countries that offer generous tax settings. But the going has been slow.
EU politicians are in need of funds to address wealth disparities across the bloc and high-priority issues such as climate change, and want to make mega-earning global companies like Google pay taxes in the countries where they actually make their money, rather than where their operations are based. However, similar laws on the EU stage have stalled, in part due to opposition from Ireland and some Nordic countries, where many big U.S. tech companies book financial gains. France is tired of waiting it out. But this isn’t the first time the country has chosen to lead the charge on a tech tax, imposing a similar levy in 2019. Both then and now, France hopes their trailblasing will lead to a global movement.
Despite having already passed the tech tax into law last year, Paris offered to suspend the regulation in January until the end of 2020 while a larger international deal was negotiated. But financial setbacks stemming from the COVID-19 pandemic have forced countries to focus on rescuing their own economies, leaving France free to singlehandedly roll ahead with the initiative yet again.
“Never has a digital tax been more legitimate and more necessary,” Finance Minister Bruno Le Maire told journalists on a conference call last week. Le Maire also noted that tech companies have fared quite well during the crisis due to a spike in people working from home, and unlike other struggling sectors can well afford the tax. “In any case, France will apply as it has always indicated a tax on digital giants in 2020 either in an international form if there is a deal or in a national form if there is no deal.”
This tax has long been a source of contention with the United States, home to these tech giants, as Washington, D.C. considers the excise an unfair targetting of American digital companies. The country has threatened retaliation via tariffs should these taxes go into effect. However, U.S. President Donald Trump’s open hostility to any form of taxation on these companies is likely to drive the EU towards making the tax a reality. Paul Tang, a Dutch lawmaker at the European Parliament, noted that “Trump will most likely unite Europe on this. We are already in a situation where the transatlantic relation is shaky.”
“There is also a growing awareness in Europe that we need to act on our own, and Trump is forcing Europe to act on its own,” Tang added. “This is not just in the area of trade and taxation, this is much broader.”
Taking on American Giants
The pandemic has exacerbated long-simmering tensions in France between organised labour and online retail giant Amazon. The company has such a large presence in the EU that the European Commission is investigating whether it has broken antitrust laws.
Threats of a walkout over insufficient safety precautions amidst COVID-19 won employees some concessions such as masks and the enacting of social distancing measures in late March. However, a union brought a suit against the giant in mid-April and a French court ultimately ordered Amazon to stop delivering “nonessential” products as part of a series of measures to protect worker health. The company responded by shutting down their French warehouses and putting 10,000 workers on paid furlough. Amazon indicated they would include an independent expert in their review of virus protocols – a concession to union demands – and insisted throughout the trial that sufficient protective measures for all workers had been provided, though this has been contested by French unions. To date, this case is the most prominent legal showdown Amazon has faced during the pandemic.
In the end, Amazon blinked first and dropped their plan to appeal to France’s Supreme Court, reaching a deal instead with the unions and their representatives. Unions hailed the decision as a victory for workers, who will return gradually and voluntarily as warehouses are set to re-open during the rest of May and June. In a statement, the Confédération Générale du Travail, Sud-Solidaires, and the Confédération Française Démocratique du Travail labour unions said the accord would allow for a return to work “in security”.
“It’s a big victory for Amazon workers in France,” as well as for others who have complained about poor virus protections, says Stephane Enjalran, National Secretary of France’s Sud-Solidaires Union.
Amazon has faced criticism in its native USA and around the world over the health and safety of its workers, especially as demands for the service skyrocketed amid lockdowns to limit the spread of the coronavirus. The company has also garnered public disapproval for refusing to provide information as to the total number of confirmed COVID-19 cases at its warehouses, leading frustrated workers to stage protests at Amazon warehouses around the world.
France has also moved to corral tech in another direction: hate speech. A new law gives social media and other sites only one hour to delete posted content related to terrorism or sexual abuse. Failing to act within that time limit could result in fines of up to 4 percent of the site’s global revenue – potentially totalling billions of euros for the largest outfits. The rule applies to all websites, but only giants such as Facebook and Google are likely to have the resources to monitor and remove content as quickly as this new regulation requires. Similar to the tech tax, this new law finds itself in limbo on an EU-level, leaving France to pull the trigger and pass the legislation at a national level.
However, this new hate speech law is not without its problems. Digital rights group La Quadrature du Net has said that the 60-minute time limit on shutting down hate content was impractical. “Except the big companies, nobody can afford to have a 24/7 watch to remove the content when requested,” said a spokesman for the group. “Hence, they will have to rely on censorship before receiving a request from the police.”
This, in turn, raises fears that tech could be used against protestors and human rights dissidents. “Since 2015, we already had such a law that allowed the police to ask for the removal of some content if they deemed it to be terrorist…this has been used multiple times in France to censor political content,” the spokesman for La Quadrature du Net said. “Giving the police such a power, without any control…is obviously for us an infringement on the freedom of speech.”