It doesn't matter anyway, the tax will never happen. They're just using it as a point of negotiation for a new US trade deal after Brexit.
How exactly will Facebook raise prices in a way that it will hit the average consumer?
The average consumer is also a worker and depends on an employer that will be paying higher advertising costs for the same benefit.
When something has near zero marginal cost, it is all just about demand. The only scarcity is caused from other bidders.
Why should a country send %X margin on all of their consumer products overseas (via ad costs) to someone who is selling their own citizens' content and capturing the users/locking them in with network effects? There is a lot of innovation at Facebook et. al., but they get a massively outsized portion of the network's value when you compare what they put in vs. what users are putting in.
Where it could hurt would be a service that can barely break even using ad revenue and goes under as a result. But for big corps with network-effect lock-in in their segment, it seems like a net win for any country that does this.
Facebook could also raise the reserve price for auctions for UK ads.
If amazon could charge an extra 3% without losing customers to other suppliers, why wouldn't they do that with or without the tax?
Currently if amazon charge £10 and argos charge £10.20, amazon wins, if amazon charge £10.30 (to 'recover' the new tax), argos wins.
If they are, this tax seems to be more like a tariff than not.
It's likely going to fall on some combination of business and consumer that we won't know a priori.
The whole point of this tax is to penalize the "tech giants" which happen to all be American, and it won't really do that.
If those companies want to keep on hiring people without staggering student’s debt, they need to contribute to the local economy. I know they already do that (I worked for such companies for long enough, and paid a lot of taxes locally) but my point was twofold:
- paying more tax is often a good thing for the people who are going to benefit from the corresponding government services; that is certainly the case in the UK;
- if your company develops, promotes and sells products in a country, it makes sense to also pay added-value- and profit-tax there, and not avoid tax by claiming that the value was created in a tax shelter like Suriname, where you have no activity.
There certainly are possible improvements, but it’s overall very well managed and there are here many aspects of how civil servants are trying to improve at the same time the cost, the efficiency, the quality but also how to think about the service that touched me. The National Health Service, for instance, is a little bare-bones but the cheapest developed health service there is. The Land Registry is incredibly helpful, especially when you depend on reliable, sensical data for your business. The BBC is expensive but peerless. Transport for London, for all its sins and there are many, transport more people, faster, further, more reliably than anyone; it’s heavily dependent on having redundancy rather than reliability but at least it works often enough. Social services are minimal and insufficient, but nowhere else can people find jobs so easily if they are motivated and willing to learn. That is also not just due to companies, but also government services that manage to let people employ others without making it too difficult.
I sincerely believe that the same system, without the stress that the Tory government is putting on the budget for education, police and health, could be world-class.
Is this really that useful in that case? Not to say the UK is irrelevant, but after leaving the EU the UK won't be as big a market, is a 2% tax on a market dominated by the US really much of a threat to, anything?
Not to say the tax has no value at all in other ways (revenue) but as a negotiating tacit, not sure what it does.
I suspect it's got more to do with countering Labour
I know it's a dogmatic talking point that you have to make to pretend that tax incidence is pointless, but it doesn't work here.
No - See [0] which is Facebook's own page about their charges. Either Facebook will soak the additional costs up and / or pass them them on their paying users - the advertisers. Who may in turn pass the increased ad costs to the buyers of the advertised products / services and/or cut internal costs. Something like that.
[0] https://www.facebook.com/business/help/201828586525529?ref=f...