VAT is basically a tax paid by people. Companies don’t really pay VAT, they collect it from the end-customers and pass it to the state.
Relying on VAT alone skews the burden of financing the state on the people only, which means no participation from the companies that make money without directly contributing to the country’s expenses they benefit from.
It also disproportionately disadvantages companies that also employ people and have a physical presence in France and have to pay taxes.
Not only that, what makes you think corporate tax is paid only by shareholders rather than customers and employees?
A business needs capital to get started -- otherwise the founders wouldn't have to give ownership stakes to capitalists. But the capitalists also have the option to put their money in real estate or bonds or companies that sell to other countries etc. A company has to beat the after-tax ROI of those things in order to raise the money it needs -- so if the taxes go up, the ROI goes down, and they need to squeeze somebody else for the rest of the money, like customers and employees. Which, when it happens to every competing business in your country, they can do since no one can undercut them for the same reason they can't charge any less or pay employees any more and still raise capital -- everyone now has higher capital costs. The capitalists can move their money to an investment in another country more easily than the customers and employees can move around, so who eats the cost?
Ah ha, you say, but what about the companies that are no longer raising capital? Facebook is an established business. They don't need to raise any further capital, so their capital costs are irrelevant and we can tax those foolish capitalists who invested in them without expecting us to raise their taxes just as they were starting to see a return on their high risk investment. Which is true, except that you just convinced investors that it's not worth investing in a prospective competitor and have thereby entrenched Facebook's market position. Oops.
It will, but it'll not be above what the market is willing to bear.
Right now digital services are charged at the level that a market can bear, but only digital services are the ones that don't get taxed.
To make stuff fair - you'd have to cut all other taxes or institute this one.
(I'd prefer no taxes, but that's never going to happen)
It’s not a fallacy. They charge to maximize revenue. If they charge more, people buy less. If their cost to produce goes up, their optimal price likely goes up, depending on elasticity.
This is Econ 101. Draw some supply-demand curves, compute total profit, increase costs, and see how the optimal point moves on the curve.
Historically companies do raise prices as cost to produce increases.
It should. And if it were just that, then we'd not have this conversation at all.
This is a very specific law targeting specific economic activity.
When it comes to B2B VAT is inconsequential for Amazon. Amazon is only affected by VAT when Amazon is the seller of a physical product to a consumer. Otherwise there's literally no impact on Amazon.
