French lawmakers propose tax on internet data use

French lawmakers have proposed taxing internet data use at 5.5 euro cents per gigabyte. The proposal is unlikely to become law, but it could set a precedent and make similar initiatives easier to pursue elsewhere, ERR reports. The point is made by Kristjan Port in a technology commentary for ERR’s R2 Portal.

Energy is already taxed, as is income generated through people’s intellectual work, though intelligence itself is not. Data, however, can be measured, making it easier to tax. The value of the data to its user may not matter to a tax authority: a short message can be highly valuable, while an unwanted advertisement may carry more data. The same contrast applies to school materials and computer games, or medical scans and cat videos.

Port argues that the push to tax data is driven in part by automation, which reduces the share of economic activity that can be taxed as labour. Automation allows more to be produced with fewer human work hours. If wages make up a smaller share of added value while capital income grows, the existing balance of taxation changes.

As societies become more complex and expensive to maintain, governments need additional sources of revenue, Port writes. The idea of taxing internet use is not new. It was discussed in the 1990s, when internet data services were only beginning to become part of the economy.

Around the turn of the century, the UN Development Programme suggested that developed countries could tax email, for example by charging one cent for every 100 messages, to help less developed countries. A tax on bits was also proposed. At the time, the cost to individual users would have been small, but collecting the necessary data would have been expensive, and the ideas were not seriously considered.

Today, data use by a few thousand households in a developed country exceeds the global volume of data traffic from 30 years ago. Port says this illustrates the value chains that have moved into the digital space.