Computer Weekly Editor's Blog

Jan 29 2016   11:35AM GMT

Google tax debate is just an early example of social upheaval from the digital revolution

Bryan Glick Bryan Glick Profile: Bryan Glick

Tags:
Apple
Google
government
HMRC
Internet of Things
mobile apps
Uber

In many ways it is a shame that the most likely reason for a technology company to hit the headlines in national newspapers and on TV is because they don’t pay enough taxes.

For all the largely justified criticism of Google’s £130m tax settlement with the UK government, surely most people in the technology community would rather be reading about the great innovations from Google et al, and how they are changing the way we live and work for the better (mostly).

But the tax argument is nonetheless one that demonstrates the scope of the technological disruption facing society and how the digital revolution will force governments, companies and individuals to re-evaluate many of the old norms we have taken for granted.

At its heart, the Google tax debate rests on an accounting principle, not a technical one – the ability for country subsidiaries of a multinational corporation to charge for services between those subsidiaries in order to shift the point of profit to a lower-tax regime. It surely can’t be beyond law makers to legislate to restrict those internal transfer fees so that profits are more accurately recorded at the point of consumption for goods and services, not of delivery.

But until technology made it so easy to split consumption and delivery of digital services, it was barely an issue.

When Apple launched the mobile app era in 2008, who could have predicted that one outcome just eight years later would be French taxi drivers on strike and burning tyres on a Paris ring road because a piece of software – Uber – is threatening their livelihoods?

For all the excitement about the great innovations we are using and those yet to be created, it’s almost impossible to predict the true social and business impact they will have – only that there will be huge upheavals as we absorb these new capabilities into our lives.

We hear plenty of scaremongering about the potential effects of robots and artificial intelligence, but think too about more mundane developments like the internet of things and how that could empower individuals like never before with information about the world around them.

Governments and legislators will always react too slowly even with so much evidence of the pace of digitally inspired social change in front of them. There are digital King Canutes everywhere – but a disturbing concentration of them among our leaders, even as they hope for the glory by association that comes from close involvement with digital innovators – look at David Cameron and George Osborne’s very public fondness for Google.

The only certainty is that taxation will not be the only social tenet that is challenged by technological change in the years ahead. As a society, we need to be prepared for further upheavals that few are likely to predict.

2  Comments on this Post

 
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  • Philip Virgo
    This raises the (all too real) question of how many of the advantages of global e-commerce are genuine and how many are "merely" tax avoidance.

    Strip out the tax and what is the "real" advantage of buying on-line as opposed to browsing on-line and buying locally.
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  • Matt X
    The tax debate highlights how global tech companies and their political allies are transforming our societies into extractive economies. They are able to extract value from the UK, for example, while paying essentially no taxes and investing little in the local infrastructure that sustains their operations. Uber undermines local transport economies with a slash-and-burn extractive model that only works as long as its drivers do not expect to earn a decent long term living from their efforts. Google bosses preach to UK politicians about the need to invest in STEM education, but Google avoids paying the taxes to fund that education. Overall, these "disruptive" models are really about destroying more complex economic ecosystems and replacing them with an impoverished one-way extractive system that consolidates wealth in the hands of a distant corporate elite. It is perhaps ironic that Britain, which grew wealthy by applying this logic to its colonial possessions, is now on the receiving end of an even more powerful force for global economic domination.
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