Hollande Finds Solution to Spying

Tax All Data Leaving the EU!

The forever befuddled looking French president Hollande, the most unpopular French president on record, has just found yet another thing he can tax.

by Pater Tenebrarum

Here comes another one from the 'you couldn't make this up' department, courtesy of the “welfare state incarnate” (h/t Gaspard Koenig), France's president Francois Hollande (Martin Armstrong pointed us to this bit of news in a recent post of his). The German business news magazine 'Wirtschaftswoche' has a story entitled “France's Answer to the NSA: Taxes on Emails Sent Abroad”.

No need to check your calendar. It is actually not April Fool's Day. As the article informs us: 

“France has the solution to intensive surveillance by US secret services: President Hollande plans to introduce a tax on data that are transferred abroad. Paris apparently regards this as the most effective method to end the spying.”

France wants to push through a tax on data transfers from the EU. Moreover, the EU is supposed to alter tax regulations for internet companies until spring 2014. These have to be taxed more heavily in the EU, France demands. The tax revenues are supposed to be distributed among EU member states.

The French minister of innovation Mrs. Fleur Pellerin has submitted the respective proposals to her ministerial colleagues in the EU according to a report by Tax News.”

The tax proposed by France is supposed to be gathered every time data are transferred via the internet from the EU to other parts of the world. It won't matter if data are transferred within the same company or to another company outside of the EU. The documents don't say how high this tax is supposed to be.

Due to current complicated tax rules, companies like Google or Amazon barely pay any taxes in most EU countries, in spite of making profits in the hundreds of millions there. Google pay its taxes in Ireland, where corporate taxes are relatively low.

NSA, CIA and FBI so far pay no taxes at all. Paris hopes that this measure will sap the notoriously tightfisted Americans' enthusiasm for spying.” 

The 'minister of innovation'? Admittedly, this is certainly an innovation in terms of finding new ways to milk the tax cows. However, one wonders how exactly is a tax on EU data transfers going to “sap the NSA's enthusiasm for spying”? Does Mr. Hollande think the NSA is going to apply for a tax number in Brussels?

Proposing this nonsense to the socialist brigade in Brussels is of course a good tactical move on Hollande's part – he hopes the greed of the other statists will allow him to introduce new taxes without running what's left of France's competitiveness completely into the ground, at least not compared to other  EU member countries. No doubt their mouths are already watering at the prospect of turning the tax screws by another notch. We have discussed the topic of tax loopholes previously, pointing out how important they actually are in 'allowing capitalism to breathe' as Ludwig von Mises put it. For readers not familiar with that particular post or the reasoning presented in it, here is the link: “The EU and Loopholes”.

Anyway, it sounds almost as though Mr. Hollande has now gone quite officially insane. The effort to keep control over data leaving the EU and then determining who exactly will have to be taxed for them is going to cost more than such a tax can ever raise, unless it is set at an astronomical level. This sounds a bit like the ugly sister of the financial transactions tax (and we didn't think it was even possible for that one to actually have an ugly sister).

The report at Wirtschaftswoche concludes by noting: 

“With the internet tax, France apparently wants to extend its policy of massive taxes on everyone and everything to the entire EU. This model has already failed in France itself though.” 

However, as we point out in our next article, Mr. Hollande's outrage over NSA spying is nothing but political theater anyway. It is part of an emerging pattern of governments trying to extend their control over the internet. The idea of taxing data transfers fits right in.