GAFA tax (as in Google, Apple, Facebook, Amazon) means that there is an additional tax payment with a higher tax rate, i.e. about 3%. Originally, GAFA tax is a proposal coming from France for digital tech giants (including but not limited to Google, Apple, Facebook and Amazon).
This will talk more about fairness most of the time, whether this is a good decision or not, along with impact analysis discussion.
Disclaimer: Conduct your own research first on Google.
Status quo is unfair
I assume that you have visited Google and you have understood that the tax in EU is low, and Ireland’s tax is only 0,03% toward these giant companies. But what we’re discussing here is about the unfairness between the income and the tax itself.
These giant companies have already monopolized by dominating the market. This is unacceptable to begin with, for there are local companies that are being overshadowed and have a tendency to shut down because all the demands go to the giant companies.
Proposition can explain the characteristics of buyers, especially the ones who live in EU, they are loyal, put purchasing priority on the latest product launch, etc. These giants basically have succeed to attract the interest of society with their great products.
Hence, we can see how the demands have developed the market themselves.
Additionally, you can explain the harms that happened in status quo, which is the companies’ tendency to do ‘back tax’ (meaning: companies can postpone their tax for years).
Moreover, government only receive little amount of collaterals along with the tax which doesn’t really give impact to the company.
That’s why it is unfair, starting from the domination and how their products have influenced the society.
How does the GAFA tax bring the sense of fairness?
- When we impose higher rate of tax, logically company will recalculate their products price on the market. It could increase, or decrease, but the latter one is more unlikely. Tax is a burden for their profit-oriented nature. When the products price are rising, there will be a shift in the market. Some people will remain loyal and keep on purchasing it, and eventually, some people will have to “adapt” to the new pricing. It is safe to assume that among their loyal consumers, there are some people who are managing their financial condition and being careful in making a financial decision.Also, to highlight that the increasing price does not come with the increase of spending/society’s salary, which makes the situation to create lesser demand toward the GAFA products. This is a good step because now those demands of the market share could be allocated for the local companies supply. That way, the competition is better for the locals as they have a chance to compete with GAFA companies.
- You can also explore on the idea how GAFA tax won’t really bother these companies since loyal consumers would still prioritize quality (they are willing to spend more money). Nothing much will happen to the profit-oriented companies. Therefore, this GAFA tax is not ‘that’ burdening and bring fairness.
This is inline with what EU stands for, i.e. fair competition
Firstly, European Union (EU) spreads the idea of fair competition for the entire EU members. The parameter of fair in here is that every company has its own market and can compete healthily. That way society will have many options to choose.
It’s important, why?
Because it’s the duty of government to provide certain standard of price starting from the low-middle to middle-high segments. It is also to ensure that society remain to have their purchasing power. Just like what we have discussed that imposing higher tax doesn’t mean the salary of society will also increase.
The domination that has happened in status quo is still far away from fair competition, considering those companies are using back tax, and offer small collaterals, so that they can still grow their market.
The common reason these companies will appeal with is pretty much sounds like:
“we already paid enough and we have followed the policies from government”.
However, you need to “remind” them that it’s not as simple as that. They need to be told on how unproportional the ratio of income and tax is; and how bad the domination is, that has created unfair competition among companies.
The current policy is not effective to keep the fairness, as it makes certain company easy to dominate, especially when society is really attracted with their premium product, and etc.
GAFA tax is unfair
Remember in the disclaimer above that this will mostly talk about fairness. Here, team negative only needs to neutralize what goverment said by negating that the domination isn’t inherently happening.
Because the status quo is not a form of domination, but company’s success to earn society’s interest and loyalty. It is the result of their superb efforts to provide great products and services. So don’t blame them if they are winning the competition.
Moving on to the essence of competition. Some will win and some will lose. It all depends on how good you serve your market, your marketing strategy, and products quality. You could elaborate the idea of how these giants have already done many efforts (e.g. discounts, bonuses, etc. to attract the market).
Or, you can also neutralize the status quo by saying that government have already assessed the tax with well calculation and as fair as possible. Government is fair and unbiased toward certain companies. Therefore, the income and tax still is considered as proportional because it doesn’t cross government policy.
To give an analysis about the unfairness, start with classic issues how companies that have fulfilled all the obligations, starting from providing CSR, worker’s insurance, etc. And just because some companies are more successful than other companies, doesn’t mean that imposing them higher tax is fair.
- The tendency of the unfairly treated companies to leave the country for feeling exploited, will give more harm than good. First, investors are more likely to pull their investment out. They are profit-oriented, and when they don’t get what they want; what’s the point of staying?Second, society will not have good purchasing power because it’s too expensive for them, if additional tax is imposed onthe companies.
Let’s assume that society is rational enough to list out their priority. This means that those giants will most likely lose their customers, and that is bad.
The presence of GAFA tax will destroy their market, since the customers have to think twice on spending money on too expensive goods. Society, as rational buyer will eventually prefer goods that are cheaper but of the same quality calibre. They will switch loyalty. Therefore, GAFA tax will only encourage the company for moving out.
- You can still elaborate more from the first impact, especially on how the local company wouldn’t be empowered at all. First, the competition is always there. The idea of companies killing each other will always be there.
Second, you can explain that there is a tendency for the companies to leave, and eventually we will lose the value that these companies bring. These companies, even though dominate our market, have contributed a lot of things. They made our lives better. Amazon inspires us to do online shopping, iPhone’s FaceTime helps us to make a video call effortlessly. These values are priceless, and the people love their innovative legacy. The values these companies bring is significant to improve the welfare of happiness of the society. As government, we should not just dismiss this fact.
GAFA tax is bad
Because many countries would be disagree with this GAFA tax, since its concept is still immature. To prevent is much better than to cure. We do not want to create additional harms, especially on the impact when the companies left the country, e.g. the loss of trust from both society and the international community.
Author is a member of an adjudication core of Medan British Parliamentary Debate Open 2019, held in University of Muslim Nusantara Al-Washliyah. This motion analysis is a contribution to further elevate the local debating community proliferation.