ZPP Newsletter
Warsaw, 26th April 2019
Experts debate the digital tax
The Union of Entrepreneurs and Employers organised a Round Table debate dedicated to the digital tax. The event’s guest of honour was Matthias Bauer, leading expert of the European Centre for International Political Economy.
On 26th April 2019, at Kafe Zielony Niedźwiedź, a meeting dedicated to the concept of digital tax was organised by the Union of Entrepreneurs and Employers. Representatives of the digital industry and the Union of Entrepreneurs and Employers, as well as Matthias Bauer, an expert of the European Centre for International Political Economy, the author of the report “Digital Companies and Their Fair Share of Taxes: Myths and Misconceptions” participated in the Round Table debate.
The meeting began with a presentation by Matthias Bauer on the main conclusions of his report. According to the expert, the corporation taxation system must undergo a thorough reform, but new forms of sectoral taxes are not the solution to the problem. He pointed, among others, to the fact that entrepreneurs from the digital industry often pay a higher effective income tax rate than companies from “traditional” business.
“The effective tax rate we consider ‘honest’ aside, the introduction of a sectoral tax aimed only at companies in the digital industry, no matter how we understand it, is a completely wrong solution,” said Bauer. “Corporate taxation system must be changed, but its main problem at the moment is its excessively high level of complexity, and additional levies for specific industries only deepen this problem.”
After the short presentation, the discussion began. As Marcin Nowacki, the Union’s Vice-President, emphasises, key conclusions from the ECIPE report coincide with the position of Union of Entrepreneurs and Employers.
“Furthermore, we believe that the digital tax is no solution to the problem of tax avoidance,” added Nowacki. “Both we and our think tank, the Warsaw Enterprise Institute, are in favour of a general, not sectoral, approach to taxation. In our view, a revenue tax would be the optimal solution.”
In the course of the discussion, Matthias Bauer emphasised that there is no rational reason why the new tax would only concern one, individual group of companies. The digital tax alone would not only be unjust, but would also be one of the obstacles to the development of the digital industry in Europe, making it difficult to build the Digital Single Market.
“Of course, taxation is a natural element of a modern state’s functioning, because various public services are financed from taxes,” Bauer stressed the fact. “But in the light of the available data on CIT inefficiencies, it is quite reasonable to ask whether we still need corporate income tax at all? It seems the answer to this question is ‘no’, while the depletion of the state’s revenue would be offset by lower expenditures or additional inflows from other sources.”
Fot. geralt / pixabay.pl
