Vienna: European Univion (EU) finance ministers battled on Saturday over an increasingly controversial proposal to slap a European tax on US tech giants, amid rising worries that it is ineffective and protectionist.
France for a year has rallied EU partners to draw up the tax which Paris says is necessary to ensure that global tech platforms such as Facebook and Google pay their fair share.
Paris fervently argues that the measure would be a popular accomplishment for the EU ahead of European elections next year, in which anti-Brussels populists could do well.
However, several northern EU countries led by Ireland argue that the tax would also punish European companies and stifle innovation.
Dublin, along with Luxembourg, are the European homes for several US tech giants that would face the tax.
“Today is the big battle day over fairness in taxation in the digital economy,” said Hartwig Loger, the Austrian Finance Minister, which holds the EU’s six-month rotating presidency.
“It is our clear goal to have by the end of the year. The first steps in taxing the digital economy at the European level,” he said.
The European Commission, the EU’s executive arm, has tabled a proposal that European countries tax “big tech” on overall revenue in the EU and not just on profits.
But lead opponent Ireland says a growing number of countries have come around to hidden problems with the tax, with key player Germany widely thought to be getting cold feet.
Caution is also urged out of fear of provoking US President Donald Trump while the threat of a EU-US trade war still looms.
“If Europe looks to deal with this issue on its own, I believe that it runs the risk of promoting a response from countries that will be affected, at a time in which global trade is under such pressure,” Irish Finance Minister Paschal Donohoe told AFP.
Amid the increasing questions, France proposed on Saturday to introduce a sunset clause so that the EU tax that would be replaced by worldwide deal, once one is reached at the OECD.
A sunset clause could serve “as a sword of Damocles motivating the international community to come to an overall ... decision,” said Latvian Finance Minister Dana Reizniece-Ozola.
But the Organisation for Economic Cooperation and Development, a club of rich nations including the US, has so far failed to reach a consensus on the matter.