Analysis: Who will Bear the Burden of DSTs? Consumers and Small Businesses.

July 12, 2019

Paul MacDonnell, Executive Director, Global Digital Foundation
 

Introduction

The European Commission (EC), some European countries and, subsequently, a number of countries around the world have proposed and, in some cases, already implemented new Digital Services Taxes (DSTs), to target the turnover rather than the profits of international digital businesses.1 These measures are inspired by two ideas: first, because of their ‘virtual’ nature, international digital businesses have unique opportunities to avoid ‘paying their fair share’ of corporate taxes; and second, because it is essential to generating profits, customer or user-contributed data is a valid basis to pin down the location of international digital enterprises, for corporate taxation purposes, to the countries where their customers and users live.

But the trouble with DSTs is that they are, in effect, levies. This means two things. First, they will be passed onto consumers as a tax, falling most heavily on people with lower incomes. Second they will raise the cost barriers to business startups that want to use low-cost digital platforms to compete in new markets. By penalising consumers and startups DSTs protect uncompetitive incumbent industries while serving as a regressive stealth tax aimed squarely at those who can least afford it. Governments which—on the back of stoking anxiety about digital businesses’ use of personal information—see the policy as both popular and good for state finances are making a serious error. DSTs’ long-term effect will be lower productivity, lower competitiveness, and lower economic growth.

The European Commission, which has identified digital technology as key to improving economic productivity, is contradicting its own stated policies in promoting DSTs.2 The EU’s growth-rate which declined from about 5% in the 1970s to around 1% during the past 10 years needs exactly the productivity boost that internet-based innovations can provide.3 But because DSTs are a tax on using the internet they will, in the end, reduce the economy’s ability to create jobs and wealth.

The problem of global corporate tax avoidance

The strategies international businesses use to avoid paying income tax

Before we go any further we need to look at the strategies that many international businesses (including digital businesses) use to pay less corporate tax. These strategies include: transfer ownership of intellectual property—a company which owns intellectual property in a high-tax jurisdiction transfers its intellectual property to a subsidiary in a low-tax jurisdiction and then routes worldwide company revenue, as royalty payments, through that jurisdiction incurring a lower tax charge; transfer pricing—a subsidiary or branch in a high-tax jurisdiction pays a higher price for goods and services purchased from a subsidiary or branch in a low-tax jurisdiction, thus minimising the tax liability of the former while increasing the profits of the latter; and inversion—a company shifts its corporate headquarters to a low-tax jurisdiction by taking over or merging with a local company. These anomalies are a product of the diversity of global corporate tax rates that, for example, sees Ireland impose a 12.5% rate while Germany charges around 30%.4

Tax avoidance strategies are not particular to digital enterprise

But there is no evidence that digital businesses use tax avoidance strategies more than their non-digital counterparts. If anything, the evidence is that they use them less. A comparison of the effective corporate tax rates (ECTRs) of digital with non-digital businesses bears this out.5 The corporate tax rates paid by digital companies like Alphabet (10-year effective rate at 26%), Netflix (26.29%), Ebay (33.87%), and Amazon (48.93%) can be compared with sectors such as food and beverage, automobile and parts, telecommunications, utilities, industrial goods and services, and banking where ECTRs average below 20%. In other words the ECTRs of digital and non digital enterprises do not differ in any way that reflect the use of digital technology.

Tax anomalies and the impact of digitisation on tax nexus are already being addressed at the OECD

It is reasonable for governments to address tax avoidance behaviour that amounts, from their collective perspective, to gaming the global tax system by international businesses, including international digital businesses. The matter is on the agenda of the OECD whose BEPS (Base Erosion and Profit Shifting) Project, was established in 2013 to address just this issue. The OECD 2013 Action Plan on Base Erosion and Profit Shifting identified BEPS as harmful to governments’ fiscal bases and called for the adoption of international norms and agreements to reduce tax avoidance.6 However, while the Action Plan states that the progressive digitisation of the economy calls for a reassessment of how digital businesses should be taxed it does not support the idea that international digital businesses are more prone than other businesses to tax avoidance behaviour. This has been the consistent position of the OECD since then as the following shows.

In 2015 the OECD BEPS Project published its final report which, while it recognised that digitisation of the economy presented some challenges for international taxation, concluded that it would be “difficult if not impossible to ring-fence the digital economy” because of the growing pervasiveness of digitisation and that proposals under BEPS actions would likely substantially address the problem of BEPSs.7 In March 2018, the OECD’s Task Force on the Digital Economy (TFDE) issued Addressing the Tax Challenges Arising from Digitalisation – Interim Report 2018 which also provided no basis to conclude that digital businesses are any more likely to use tax avoidance strategies than non-digital businesses.8 The report does acknowledge that there are differences of opinion amongst OECD members about the tax treatment of international digital businesses and that any policy change needs to be carefully designed so as to prevent damage to the digital economy. But it finds that countries have made significant progress towards addressing BEPS—the substantive tax-avoidance related issues. In particular, the OECD reports, companies have reconsidered their transfer pricing practices, and relocated and on-shored valuable intangible assets. In other words tax avoidance problems are on the way to being substantially resolved.

In conclusion, the analyses, discussion, and conclusions reached at the OECD have been concerned primarily with eliminating tax avoidance anomalies that have occurred among all kinds of multinational corporations. The OECD has acknowledged that the question of changing corporate tax arrangements to reflect the location of customers of digital businesses is open and should be further explored. But it is important to recognize that the direction of discussion at the OECD is entirely concerned with how digitisation affects the nexus, or location for tax purposes, of international businesses. The only area where we can see some OECD members’ opinions possibly influencing decisions to introduce DSTs is opinion, recorded in the Interim Report (see footnote 8 above) that the value contributed by users to digital businesses is untaxed. However this opinion is neither supported by any evidence nor in receipt of widespread endorsement.9

Going it alone on DSTs


The argument for DSTs

The European Commission’s proposal, and a number of countries’ decisions, to tax digital enterprises based on the location of their customers or users rely on the argument that international digital enterprises are more likely than their non-digital counterparts to avoid paying corporate income tax.

The premises of the argument for a DST are that it is justified because:

  1. international businesses (including digital businesses) use strategies to avoid paying corporate tax in high-tax jurisdictions;

  2. digital businesses are more likely than non-digital businesses to use these strategies because the ‘intangibility’ of their assets and the ‘virtual’ nature of their business models makes it easier.

But when we look at B above nowhere has the European Commission or any government offered evidence that international digital enterprises actually do pay less corporate income tax than their non-digital counterparts.

The real underlying reasons for DSTs

So what is the reason for the imposition of DSTs? There are several. Policymakers’ rationalisations in support of DSTs stem from anxieties about disruption—economic, social, and political—that form a vortex around digital platforms. The internet is disrupting industries across the world. First, the economy. Hotels are fearful about online room rental services provided by homeowners. Taxi companies worry about app-based competitors from outside their regulated and licensed environment. Retailers of every kind worry about online shopping.10 Second, the internet’s ability to provide a home for transgressive content, including: pornography, political disinformation, and anti-democratic politics, as well as providing channels for cyberbullying, and various forms of hateful speech, has attracted the attention of policymakers and politicians.11 Third, no one, not even their designers, had any idea that digital platforms would become new public squares where political movements would organise to effect political changes that many find alarming as much for their rapidity as their frequent radicalism.

Businesses that were founded to enable people to connect with and keep track of each other have unwittingly become agents of social and political transformation with implications that go far beyond even the grandest visions of their founders. In particular, digital platform owners have struggled to draw the line between robust confrontation and destructive personal disparagement with the result that discussion on digital platforms often freezes out moderate voices. As a consequence, in an atmosphere resembling late 18th century Britain and America, policymakers and politicians struggle to distinguish social media’s real, significant, urgent and as yet unresolved civility and anti-social challenges from radical and fast-moving political campaigns, from both the right and the left, that are disrupting the economic and political status quo in Europe and the United States.12

Like most other human beings policymakers react more strongly to bad than to good news.13 The problem of addictive use of social media, its facilitation of anti-social behaviour, the data collection strategies of its owners, and its alleged manipulation by foreign powers has been seized upon by policymakers as a casus belli against digital platforms as begetters of protean forces that promise disruption in almost every sphere of life.14 Casting social media as a threat to (depending upon the situation) mental health, social stability, or national security they have created powers to punish citizens responsible for posting anti-social material and are now seeking powers to punish social-media executives for not removing it quickly enough.15 The cumulative effect is to place, in the public mind, a question mark beside the moral competence of digital platform companies. Thus the ground is cleared for extraordinary measures.

The result is bad public policy. One example is the transposition of an offline anti hate-speech regime to an online environment, that turn a tweet into a matter for the criminal courts, when exclusion from the platform for egregious incivility would be both more effective and less drastic.16 Another is the DST, a panicked response that seeks to ground all of the internet’s problems, real and imagined, in a business model that supposedly exploits the personal data of citizens for profit.17 This latter belief, that user-contributed data is—even though it is freely given in exchange for services—‘exploited’ by social networks and retail digital platforms for profit is a key element in the justification of DSTs. This is based on the occult belief that the collection of user-generated data via the internet is, because of its ‘intangibility’, of itself a unique generator of value different from a company simply writing down and committing to memory what its customers like and don’t like. The resulting intuition, that digital platforms ‘exploit’ personal data, is no less a superstition than the belief of 19th century Chinese city-dwellers that the new technology of photography would steal their souls.18

Policymakers who support DSTs will note that the corporate tax paid by a non-digital business that folds will not be replaced by the foreign digital business that has supplanted it. But they will neglect the fact that many small businesses are being created through, and could not be sustained without, the use of digital platforms and other internet technologies.19

For example, tiny, out the way guest houses throughout rural Europe rely on internet platforms to receive bookings and payments, to be found by their foreign guests who are driving internet-hired cars, and, once their happy visitors have left and posted favourable online reviews, to sell more rooms. Tens of thousands of sole traders, whether graphic designers, childcare workers, or taxi drivers depend upon the internet for employment. Policymakers weighing DSTs that threaten to levy many such activities do not have these small-business people and their customers in mind.

Analysis

Introduction

Following the European Commission's proposal countries that are planning or have already enacted DSTs include: France, Hungary, India, Italy, Chile, Spain, and the United Kingdom.20 Most of the taxes are a variation of a tax that must be paid if both the national and global turnovers of the international digital business rise above certain thresholds.21 For example, Spain’s government is proposing a 3% DST on online ads, marketplaces, and data transfer services (i.e. revenue from sales of user activities). Digital businesses with worldwide revenues at or over €750m and revenues in Spain at or over €3m would be eligible for this tax.22 Meanwhile the UK government intends, during 2020, to introduce a DST also at 3% on the UK turnover of digital businesses with £25m or more in revenue—derived from search, social media, and online marketplace—that have global revenues of £500m or more.23 Finally the proposed French DST would be levied at 3% on the French turnover of digital businesses with €750m worldwide revenue and €25m French revenue selling “personalized” digital advertising, and providing intermediation services such as marketplace services on a two-sided platform (e.g. eBay).

The limitations of a partial equilibrium analysis of a DST

The impact of the proposed DSTs can be looked at in terms of the impact within those markets they directly affect through the use of a partial equilibrium analysis. A partial equilibrium analysis of DSTs, such the Deloitte / Taj The French Digital Service Tax, An Economic Impact Assessment captures the impact on actors within the markets immediately affected by a DST. It identifies the effect such a tax is likely to have on the price of advertising and of the responses of buyers and sellers in the online advertising market. As such it provides sufficient evidence for policymakers to draw back from implementing DSTs. However the secondary, longer range, and longer-term effects of DSTs are more profound and more insidious than the effects captured by a partial equilibrium analysis.

Where a partial equilibrium analysis is confined to the impacted markets affected by a DST a general equilibrium analysis could identify and examine a range of second order impacts, such as the effect on the free services provided by digital platforms in exchange for personal data. The wider possible effects include, but are not confined to, the imposition of charges on low-income users on a two-sided platform where—because they exchange personal data, such as browsing or biographical interests, for free services—users are not counted as part of the affected market in the first place and so are not deemed to be affected by a DST. Other, more profound, effects include disinvestment in productivity-enhancing business models after they are subject to DSTs. The remainder of this analysis looks out from the standpoint of a partial equilibrium analysis to other corners of the economy.

The impact on low-income users of free online services

Policymakers have stressed that the business model of two-sided internet platforms relies on aggregated data provided by individual users of their free services. Yet in proposing DSTs they have ignored the possible effect on these users. In particular they have neglected that the reliance placed by a single user on these services—such as email, messaging, or social networking—far exceeds the reliance placed on any single user by the internet platform. Should Google or, for that matter, Facebook wish to recover from their users, as opposed to their advertisers, some of the cost of a DST then the economic impact would be highly regressive as the cost of using social networking, email, and document storage services rose above zero. Two-sided platforms that provide free services in return for user data and who sell online advertising may begin to consider ways to charge the users of their free services. An initial charge of, say, $1 per month on users of previously free services would mirror policymakers’ determination to monetise their citizens’ use of these services as tax revenue. More likely is that Google or Facebook will pass most of cost onto advertisers and existing paying-customers for data services who will either build these costs into the price of the products and services they sell online or absorb them into their own business and household budgets.

The impact on small business and sole traders

Looking more closely at the impact on small businesses and sole traders, Spain’s proposed DST of 3% on online ads, marketplaces, and data transfer services will be paid for by businesses, large and small, for whom online advertising is a cost-effective way to reach existing and potential customers. Such a tax will have a tendency to drive advertisers away from online advertising. The impact on small businesses will, in that sense, be similar to the impact on consumers. Most small businesses are sole-traders who use digital platforms to find work. They tend to be providers of personal services such as taxi driving or gardening. The DST will fall on them as a tax on work. Here we can see the potentially odious nature of DSTs. At the behest of incumbent suppliers, such as hotel groups and established licensed taxi companies, governments have sought to deter home and car owners from taking advantage of internet platforms to sell services such as accommodation and transport.24 Even though it is certain that services like Airbnb and Uber have expanded the size of the markets for accommodation and taxis to people on lower incomes, provided additional income for low earners, and boosted visitor numbers and tourist revenues governments and city authorities have sought to clamp down on individual service providers using these platforms on the basis that regulation of the sector is not equivalent to that applying to other providers in those sectors against which they compete—hotels and traditional taxis.25 This is despite the fact that specialist internet platforms like Airbnb and Uber provide feedback, monitoring, security, and dispute resolution systems that rival anything seen or mandated in the mainstream hotel or taxi sector.

The impact on investment

The impact on consumers and businesses should be a sufficient reason for countries to drop their plans for DSTs. However, an even stronger reason is the impact on investment. A tax such as Spain’s 3% DST will discourage internet platforms from providing digital advertising and push them towards seeking a return on their capital investment in other areas. The result of DSTs will be a shift of investment out of the digital economy and this is likely to have all sorts of unforeseeable, unintended, and undesirable effects.

The net result will be a reduction in the financial return to capital in the digital economy by raising the price of goods and services sold through digital platforms.26 This will push sales of goods and services offline and, by making their mediation more expensive and cumbersome reduce the overall level of economic activity.


Could DSTs foreclose free expression?

Policymakers’ negative characterisation of digital platforms lays stress on their role as economic disruptors and as conduits for harmful activities such as political disinformation (‘fake news’) and cyberbullying. 27 As such while they rationalise the introduction of DSTs as a response to alleged underpayment of corporate taxes policymakers appear to be relying on public anxiety about media platforms’ disruptive and allegedly downright harmful effects to forestall criticism of these taxes as damaging to the interests of consumers and businesses. Hence it is likely that many consumers will assume that DSTs are a form of ‘sin tax’ imposed on digital platforms whose widely-publicised negative side effects need, like those of the alcohol and tobacco industries, to be reined in or, at least, accounted for. At the same time the imposition of a turnover tax on digital platforms signals a level of government intrusion and potential control over platforms’ operations that has no counterpart outside the tobacco and alcohol industries. When taken together with policymakers’ widely publicised threats and legislation targeting anti-social content and ‘fake news’ there is cause for concern that DSTs will, apart from their harmful economic effects, further intimidate digital platforms into shutting down legitimate expression of political dissent. 28

The economic justification for DSTs is questionable: the giant digital platforms are no longer the real digital economy

Another justification for DSTs comes in the form of an assumption that digital platforms are both more economically powerful than they really are and that they somehow stand apart from the rest of the economy. The impact of digital technology within and throughout the whole economy over the past 25 years dwarfs the impact of digital technology companies themselves. In particular, while some large digital platforms are major players in key business sectors such as retail they are, and will likely remain, a relatively small part of overall global international economic activity. One indication of this is that digital enterprises account for just a fraction of 1% of [combined][0] foreign direct investment, and cross-border mergers and acquisitions which, in 2017, totalled approximately $2.5 trillion. 29 At the same time IDC predicts that global investment in digital transformation of business practices, products, and organisations will be $2 trillion in 2022 alone. 30 That, in a single year, is 45% of the combined $4.39 trillion market capitalisation of the top six technology companies, Microsoft, Apple, Amazon, Alphabet, Alibaba, and Facebook. 31

The impact of a levy on a business model, the case of ebooks

Given that the DST will function as a levy on a new business model it is helpful to examine the impact of another regulator induced price increase on another business model, ebooks. After publishers successfully forced ebook sellers to accept publisher-dictated prices for ebooks, the average price of an ebook rose by $5.00. 32 The result has been that, for in-copyright books and texts, cost savings from publishing, selling, and distributing ebooks are often not passed onto consumers. Regulatory interventions into the ebook market have protected the old paper publishing business model at the expense of ebooks. The European Commission played a negative role in these developments when, in 2017, it forced Amazon, on pain of a possible fine of 10% of its worldwide turnover, to abandon most-favoured nation clauses in its contracts with ebook publishers. 33 These clauses required ebook publishers not to undercut Amazon's platform in their pricing of ebooks through other channels. This further reduced the potential for Amazon’s platform to drive down the price of ebooks.

As a consequence, publishers who feel they stand to lose from the rise of ebooks dictate the terms of how and for how much their books are sold. One sign of this is that publishers do not separately report their ebook sales though they do confirm that they are falling. This has dramatically slowed down the spread of ebooks and deprived many people on low incomes of access to cheaper ebooks. 34 The explanation, which has seldom been challenged, for the relative decline in ebook sales is that younger readers prefer physical books to ebooks. 35 But the fact is that, in many cases, ebooks are more expensive than their paperback counterparts. 36 The result is a slowing of the ebook business model as consumers no longer see them as offering value for money. They have become, instead, a luxury product.

Of course the increase in ebook prices that followed changes in Amazon’s agreements with publishers are not a levy. But their economic impact on the business model for ebook publishing, sales, and distribution serve as a case-study on the impact of a regulatory-induced price increase—or a legal inability to cut prices—across an innovative business model that prevents consumers from benefiting from that model’s inherent efficiencies. The result is that the business model is hampered and consumers lose.

Conclusion

The observable economic impact of DSTs is a sufficient reason for policymakers to stop and think. First, the likely economic incidence of a DST, (in other words, who, in reality, will end up paying the tax) is, despite the fact that a digital platform may be its ostensible target, likely to be borne by platforms’ advertising customers, by advertisers’ own customers, by users who pay for enhanced versions of platforms’ often-free services—such as Google One, Google’s software and cloud storage service—and by successive customers of these DST taxpayers that are further downstream from these transactions.37 If companies like Facebook and Google pass the tax onto their paying customers then, in Facebook’s case, these will be advertisers and buyers of the company’s user data, and in Google’s case, the taxes may be passed onto paying customers who include both advertisers and the large and growing customer base for the company’s cloud storage and software services. In the case of Google, as its drive and software services are inexpensive and disproportionately used by small businesses, students, and the education sector the DST could fall as a highly regressive levy on nonprofits and on people with lower incomes. In the case of Facebook it appears likely that the tax would fall disproportionately on small and medium-sized businesses who make up the bulk of its paying customers. This contrasts sharply with the impact of corporate taxes which are levied on profits, not turnover, and which are primarily felt by a much narrower base of company shareholders and employees as a progressive tax.38 If digital platforms pass the cost of DSTs on to their customers and paying users then small businesses and households on low incomes will find they are handing a higher portion of their budget to the state.

The DST could, therefore—just like taxes on tobacco and alcohol—function as an excise tax. Excise taxes are often levied as ‘sin taxes’ on consumption that is deemed harmful or to have negative social side-effects, such as smoking and drinking alcohol. In that sense a DST could do what all ‘sin’ consumption taxes are intended to do—depress consumption at the expense of raising government revenue. DSTs are, therefore, likely to be regressive.39

Criticism of DSTs has tended to focus on their effect on the near-term experience of consumers, businesses (especially small businesses) and investors. But their real damage will form a hinterland across the economy and into the future that is likely to extend far beyond the short-term observable effects. In penalising internet-based business models the DST will rob consumers of the benefits of future innovation. The benefits conferred on society by two-sided digital platforms, which are very much the target for DSTs, are almost too large and disparate to measure. The long-term effects will be insidious because, while they will be profound, they will be hard, even for professional policy analysts and economists, to follow. It is difficult to measure or even refer to what has never been allowed to come into existence. The subsequent discussion of their impact could well be captured by representatives of incumbent vested interests. When the CEO of Hachette Livre, Arnaud Nourry, told the Guardian newspaper that ‘ebooks are stupid’, he was performing a corporate victory dance over the death of an innovation without fear of being challenged by a newspaper that aims to report the perspectives of people on low incomes.40

End


Views expressed in this article are those of the author and not those of the Global Digital Foundation which does not hold corporate views.

Notes

  1. PWC, (2018) Economic and Policy Aspects of Digital Services Turnover Taxes: A Literature Review, December 2018.

  2. European Commission (2015), A Digital Single Market Strategy for Europe, COM(2015), European Commission, 6th May, 2015.

  3. Bart van Ark, Klaas de Vries, Kirsten Jäger (2018), 'Is Europe's Productivity Glass Half Full or Half Empty?, Intereconomics, Vol. 53, March/April 2018, No. 2, pp 53-58.

  4. Elke Asen (2019) 'Corporate Income Tax Rates in Europe', taxfoundation.org, February 7, 2019.

  5. Matthias Bauer (2018), Digital Companies and their Fair Share of Taxes: Myths and Misconceptions, ECIPE, February 2018.

  6. OECD, (2013), Action Plan on Base Erosion and Profit Shifting, Paris, OECD Publishing.

  7. OECD, (2015), Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final Report, Paris, OECD Publishing.

  8. OECD, (2018), Tax Challenges Arising from Digitalisation – Interim Report, 2018: Inclusive Framework on BEPS, OECD/G20 Base Erosion and Profit Shifting Project, Paris, OECD Publishing.

  9. OECD, (2018)

  10. Grossman R. (2016), 'The Industries That are Being Disrupted the Most by Digital', Harvard Business Review, March 21, 2016; and Streitfeld D. (2017) ‘Tech Giants, Once Seen as Saviors, Are Now Viewed as Threats’, New York Times, 12th October, 2017.

  11. Katehakis, A. (2011) 'Effects of Porn on Adolescent Boys', Psychology Today, web post, July 28, 2011; Anderson M. (2018), 'A Majority of Teens Have Experienced Some Form of Cyberbullying', Pew Research Center, 27th September, 2018; and Fiorentino M. R. (2018), 'France passes controversial 'fake news' law', Euronews.com, 22nd November, 2011; Dearden L. (2015), 'David Cameron extremism speech: Read the transcript in full', Independent, 20th July, 2015; for a contrary view on the internet’s supposed tendency to encourage radicalisation see, Economic and Social Research Council, (2016), 'Social media and internet link to radicalism is overstated, finds study', ECRS, 11th November, 2016.

  12. Wendell, B. (2016), Press and Speech Under Assault: The Early Supreme Court Justices, the Sedition Act of 1798, and the Campaign against Dissent, Oxford, Oxford University Press, pp.1-39; and McCalman I. (1988) Radical Underworld Prophets, Revolutionaries and Pornographers in London, 1795–1840, Cambridge, Cambridge University Press, pp.8–18.

  13. Stuart N. Soroka, 'Good and Bad News: Asymmetric Responses to Economic Information', The Journal of Politics, Vol. 68, No 2, May 2006, pp. 372-385.

  14. Reuters (2019), 'Factbox: 'Fake News' laws around the world', Reuters, 2nd April, 2019; see also, Wågström G. (2018) 'Is Social Media Addiction Worse Than Cigarettes?', Forbes.com, 21st November, 2018; and Allcott H., Gentzkow M. and Yu C. (2018), 'Trends in the Diffusion of Misinformation on Social Media', NBER Working Paper, January 2019.

  15. Stewart H. and Hern A. (2019) 'Social media bosses could be liable for harmful content, leaked UK plan reveals', The Guardian, 4th April, 2019.

  16. Levy Gale, L. (2016) 'Arrests for offensive Facebook and Twitter posts soar in London', Independent, 4th June, 2016; and MacDonnell P. (2019) ‘What we are Getting Wrong about the Regulation of Online Speech’, to be published on www.globaldigitalfoundation.org, June, 2019.

  17. Naughton J. (2019) ''The goal is to automate us': welcome to the age of surveillance capitalism', Guardian, 20th January, 2019.

  18. Angelis C. (2016), 'Early history of photography in China', gbtimes.com, 5th April, 2016; and MacDonnell P. (2018),'Digital Taxes are a Bad Idea', Global Digital Foundation’, 2nd November, 2018.

  19. Bouman H., et. al, 2018, "The impact of digitalization on business models", Digital Policy, Regulation and Governance, pp. 105-124; and U.S. Chamber of Commerce, (2018), Examining the Impact of Technology on Small Business, January 18, 2018.

  20. European Commission (2018), 'Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence', Brussels, European Commission, COM (2018) 147 final, 21st March, 2018; and PWC (2018).

  21. Congressional Research Service (2019), Digital Services Taxes (DSTs): Policy and Economic Analysis, R45532, CRS, 25th February, 2019, pp. 3-7.

  22. Deloitte (2019) 'Bill on digital services tax submitted to parliament for approval', Deloitte. tax@hand, 18th January, 2019.

  23. Sandle, P. (2018), 'Britain to target online giants with new 'Digital Services Tax'', Reuters, 29th October, 2018.

  24. Stothard M. (2016), 'Airbnb faces tighter controls in France from hotel lobby', Financial Times, 14th December, 2016; and, Lomas N. (2018), 'Spanish 'anti-Uber' taxi strike ends after government agrees new regulation’, TechCrunch, (2018).

  25. Zervas G, Prosperio D., and Byers J. W. (2017), 'The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry', Journal of Market Research, October 2017, pp.687-705; and, Chassany A., (2016), 'Uber: a route out of the French banlieues', Financial Times, 3rd March, 2016.

  26. Congressional Research Service (2019).

  27. Goujard C. (2018) 'France is ditching Google to reclaim its online independence', Wired, 20th November, 2018, https://www.wired.co.uk/article/google-france-silicon-valley; Stupp C. (2018), 'Five Commissioners team up to threaten internet platforms with EU legislation' Euractiv, 9th January, 2018; European Commission Press Release, (2009), 'Safer Internet Day 2009: Commission starts campaign against cyber-bullying', Brussels, 10th February, 2009; Bond D. and Robinson D (2017), 'European Commission fires warning at Facebook over fake news', Financial Times, 30th January, 2017.

  28. Hern A., (2019) 'Internet crackdown raises fears for free speech in Britain' Guardian, 8th April, 2019; and, Global Network Initiative (2017), 'Proposed German legislation threatens free expression around the world', April 10, 2017, web page.

  29. Gestrin, M. V. and Staudt J. (2018), The Digital Economy, Multinational Enterprises and International Investment Policy, OECD, Paris, www.oecd.org/investment/the-digital-economy-mnesand-international-investment-policy.htm.

  30. IDC (2018), Worldwide Semiannual Digital Transformation Spending Guide, Framingham, IDC.

  31. Desjardins J. (2019) ‘Animation: The Biggest Tech Companies by Market Cap Over 23 Years’, Visual Capitalist, 18th March, 2019.

  32. Kozlowski M. (2018), 'Are ebooks too expensive in 2018?', GoodEReader, 14th May, 2018; and, Owen L. (2014), 'In Amazon/Hachette deal, ebook agency pricing is a winner', giga.com, 14th November, 2014.

  33. Vincent J. (2017) ''Amazon will change its ebook contracts with publishers as EU ends antitrust probe', The Verge, 4th May, 2017.

  34. Rowe A., (2018), 'Traditional Publishing Ebook Sales Dropped 10% In 2017', Forbes, 29th April, 2018.

  35. Cain S. (2017), 'Ebook sales continue to fall as younger generations drive appetite for print', Guardian, 14th March, 2017.

  36. For example on 20th May, 2019 Amazon was selling Siddhartha Mukherjee's 'The Gene: An Intimate History', published by Vintage, for £6.69 in paperback while the Kindle ebook was priced at £8.05.

  37. Pellefigue J. (2019), 'The French Digital Service Tax, An Economic Impact Assessment', 22nd March, 2019, Deloitte / Taj; Congressional Research Service (2019); for a brief discussion of who really pays corporate taxes see Worstall, T. (2011), 'Corporations Do Not Pay Taxes: They Can't, They're Not People', Forbes, 22nd September, 2011.

  38. Harris B. H. (2009), Corporate Tax Incidence and Its Implications for Progressivity, November 2009, Tax Policy Center, Urban Institute and Brookings Institution.

  39. Chernick, H., & Reschovsky, A. (2000). ‘Yes! Consumption Taxes Are Regressive’, Challenge, 43(5), 60-91.

  40. Flood A. (2018)''Ebooks are stupid', says head of one of world's biggest publishers', Guardian, 20th February, 2018.

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