IMO, it's as much about anchoring as anything else. For the same reason shops put a $5000 handbag in the window to make $300 bags inside seem appropriately priced, the price of traditional bulbs leaves people outraged at the cost of LEDs. Even if they're a different product that lasts longer and costs less overall. And even if they put the $30 LED bulb in a $200 light fitting. Personally, I suspect that some people wouldn't willingly switch until light fittings can come with LED bulbs built in, designed to last the lifetime of the fitting (or at least as something designed to be replaced just a few times).
So. Why should they NOT pay taxes in Argentina, if they are a registered company, with employees, who enjoy the benefits of being a company here (for example, they can take a loan). And they make their profits here and send them abroad completely untaxed.
They certainly should pay taxes in Argentina (and they probably do, but probably very little). The big problem is that it's very hard to define what a company's Argentinian profit is vs their Brazillian profit or their Irish profit. The costs are all over the world, and often not specific to a particular country where the service is supplied. We can see, often easily, that the system is being gamed. But that isn't the same thing as being able to say what the correct profit to tax actually is. That's why I think that profits should be taxed when they become dividends/interest payments (and the earned/unearened tax gap fixed). In the UK we pay one rate for salaries (20%/40%/45% (income tax) plus 12%/2% (national insurance) plus 13.8% (employers' national insurance)), a reduced rate on dividends (0%/32.5%/42.5%) + 20% of profits on profits, and other rates (20/40/45% only, I think) on things like interest. The corporate tax acts a bit like the profit equivalent of the extra payroll taxes many companies have, like our national insurance. But it gets avoided. So instead, why not charge one set of bands for everything (30%/45%/50%, say, or whatever it takes to raise the same revenue). Then scrap the corporate tax. People will then pay what was corporation tax but via their dividends.
Lots of comments come here from americans, who are very loud about anti taxing, and yes, I fully agree that paying taxes sucks, but you have to understand this: the US prints the world's money. Italy doesn't. All international transactions are made in USD. Italy (and any other non-US country) loses money from their reserves to pay google. Google takes this money offshore. They do the same in the US, but it doesn't matter, as the US simply keeps printing more and more money to compensate (why do you think the USD is so devaluated?).
I doubt that Google sells advertising to Italians, from Ireland or not, in USD rather than Euros. And no money comes out of Italy's reserves because:
Making really stupid observations such as "the physical servers aren't in Italy" is incredibly shortsighted. Google is providing a service, and making money. They should pay taxes *LIKE EVERYONE ELSE*. By no means i say google should pay more, or less. I'm simply saying they should. Along with amazon, and any other company that makes not millions, but billions a year and pays ridiculous sums. They get to subvert the system, make a country lose millions every year in both reserves and lost tax money, unemployment from local companies that go broke because of the unfair competition,etc.
They certainly do subvert the system. But it's very hard to calculate what they should pay. If you have many servers in many places, and they all play a part in serving customers in many other places. And if you do development in a few places but that software goes on servers which serve the whole world. And if you do things like research on self driving cars in the US, but with the goal of producing a worldwide product. And if your salesmen sometimes sell to a big client who uses one contract to show ads all over the world. etc. What's your 'Italian' profit? How do you divide the costs in to Italian costs, and the revenues in to Italian revenues? Whose rules do you use for deciding what's a cost, what's an investment, what gets tax credits and how things are depreciated? It's all an accountant's opinion (and wet dream). It's an essentially made up number that can be manipulated, obfuscated and argued over endlessly. And it's going to waste a lot of resources in the company and the tax authorities doing that.
Much easier to tax dividends (and capital gains, of course, but I don't see why those should be taxed differently).
This is just the beginning. Most countries will start applying restrictions like this to international companies once the volume becomes big enough. It's not a problem if a few thousand people across the country make purchases. But it is when millions do every day.
Probably. Taxing dividends and not profits probably won't happen because people (falsely) see corporation taxes as less of a tax on themselves than income taxes are. And even if they can get over that they'll get upset over foreign shareholders not paying anything to their exchequers. So, instead, we'll have a big mess of ambiguous and conflicting rules and political compromises.
What is italy ? The idea that a patch of land and history forms a magical entity which give a small group of people the right to tax and control the people living therein seems entirely arbitrary to me.
Italy is a place where a part of what everyone produces within its borders is pooled/redirected/taken/stolen (delete according to political views) in order to produce roads, policing, waste disposal, health care, defence and other public services to people living within the same boundaries. And this is done because it makes human lives better. Though, admittedly, being Italy, often not done very well. And the small group is elected (though, again, being Italy, often despite being venal and corrupt to the point of comedy). And I think you'll find that the vast majority of Italians will agree that the principal of taxing to provide public services is the right one, even if they disagree with particulars and misuse. Taxation is not illegitimate.
Why should the italian government have any special purview over what is bought and sold over the internet ?
Because it's economic activity involving people within their borders - and if you want your tax system to be legitimate (and accepted and able to support your public services), you can't just decide that big groups of people get to not be taxed without breaking the law. Again, it comes down to 'because it makes life better': governments need a way to redirect some of their country's resources to public services.
Who's to say whether a specific ad targets italians or not, the language ? What if the ad is in english, would it still be considered to target italians? What is the advertized product is not sold in Euro's, would it still be taxable and subject to these regulations ?
It wouldn't seem reasonable to use the target of the adverts alone to decide who gets to tax the cost of them. But if Italian products (or imported ones, for that matter) are being sold to Italians in Italy through adverts delivered specifically to Italians then, short of finding a genuinely loss-making operation, it would seem ridiculous to suggest there's no Italian profit to tax. Given the system tax systems we've got, and given that Google actively subverts them, it's quite right for the Italian government to want to pursue this.
Where you DO have a good argument is in suggesting that it's next to impossible to actually physically locate profit within national boundaries in a way that isn't tortuously complicated, ambiguous and very open to abuse. It's also wasteful; think of all the pointless bureaucracy that goes on to make it happen. IMO, it'd be much more sensible to levy the tax when it becomes a dividend (or loan interest payment, on which corporate taxes aren't currently levied). With quite a small number of exceptions people are much easier to locate, and taxing the dividends means you can make the tax progressive by applying tax allowances and bands. It would remove a huge amount of tax collection and reporting effort and remove the risky bias companies have in favour of debt over equity. Personally, I'd also take the opportunity to remove the huge imbalance between the tax on salaries and other kinds of income by setting the tax regime the same for all of them.
There'd be many ways they could move - new companies emerging in different places and old ones shrinking, hiring freezes in one office and increases in another, outright relocations. You'd have to ask an accountant/mover if you need to know the cost. The reasons for shouldering the cost could be many: better quality housing, lower commuting times, better quality of life, a way to attract staff who might not find that area appealing, lower office costs and so on. And, of course, if whole segments of the community are not being well served then its something city/state planners should be taking a legitimate interest in, which may make life difficult for companies that need permits.
The problem comes about because of the tendency of industries to cluster. It's good for employers because they get a pool of employees, easier networking, more spontaneously presented commercial opportunities and so on. It's good for employees because they get competing employers and combined career opportunities for spouses. But it also causes problems when the cluster gets huge - as I experience around London - of high housing costs, poor housing sizes, difficult transport and huge problems for people on lower wages. One answer, of course, might be creating a new cluster elsewhere (leaving the old one still there, but not as large/growing as much), but that's not something one employer can do on its own, even if it wants to.
The US is a big country....it just doesn't make sense from a quality of life point of view (and that is, after all, the point of economic activity) to have huge numbers of people competing to live in one tiny corner.
Indeed he won't care, because he hasn't done this to 'protect children' or any similar thing. It's about political positioning: it's purpose is to present a certain image of the Conservative party - we're this sort of people - to a particular segment of voters who they hope will vote for them. (It wouldn't surprise me if this includes wives wondering what their husbands are doing as much as parents). It also helps distinguish themselves from their coalition partners who are the most pro-civil liberties of the mainstream parties, and who may be seen by some as saying 'we oppose protecting children'.
A huge amount of government policy and law is symbolic. Like the rest, you will notice that it doesn't have to actually work in order to achieve these goals.
Neutrinos have bad breadth.