French President is considering the option of levying a new tax on Facebook, Google and other technology companies who gather users' personal data without paying them.

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France has been trying to look into additional avenues which can be taxed to lend some support to the economy of the country. It now seems that the French President Francois Hollande may be considering levying a new tax on the likes of Facebook and Google, simply for making use of the personal data of millions of users.

These hints come from a report which the French President had commissioned and which deems personal data as ‘the raw material of the digital economy.’ The report state that since Facebook and Google do not pay their users for utilizing their personal data for purposes of advertising, the users essentially turn into unpaid employees.

The report then goes on to propose that a new tax structure must be levied on the technology giants who make use of the personal data without paying the users for it. The big question is, are the technology companies going to cooperate if the French government imposed such a tax?

It is important to note here that the likes of Google and Facebook pay substantial amounts of taxes in U.S., which is where they are based. But in other countries, these companies are able to manage paying comparatively smaller amounts of taxes. However, the low taxes these companies pay also ensure that their respective services are being offered to millions of users free of cost.

For instance, if Facebook wasn’t making good revenue, it would be absurd for Zuckerberg to keep offering the service to nearly a billion users and incurring huge costs on that account. His company is able to offer the social network, for free, to these users precisely because it also makes billions in doing so. Yes, the profit margins can be mitigated somewhat but defining a tax on ‘personal data’ can be a tricky thing and the French government must proceed carefully on the issue.

Source: NYT

Courtesy: TNW

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  On January 22, 2013(1 year, 7 months ago.)

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