French made: Tax on personal data could cause dust up

Feb. 1, 2013 | by Bryan Pearson

If there is one thing the French government is not laissez-faire about these days, it is taxes. But its recent proposal to attach tariffs to personal information is more a faux pas than a fix.

This is what French regulators are exploring, as explained in a recent story in The New York Times. The government, cash-strapped and looking for ways to raise revenue, is proposing an Internet tax on the collection of consumer data.

This is not an arbitrary choice. In addition to raising money, the levy would resolve what the government sees as tax avoidance by Internet giants such as Facebook, Amazon and Google, all of which collect warehouses of personal data regularly. According the NYT story, Google alone generates more than $30 billion a year in advertising revenue, $2 billion of which is in France. Yet it and other American Internet companies pay almost no taxes there.

“The report published Friday said a tax on data collection was justified on grounds that users of services like Google and Facebook are, in effect, working for these companies without pay by providing the personal information that lets them sell advertising,” the NYT story stated.

Put another way, someone’s personal musical preferences, payment preferences or Facebook “likes” should come with a price tag.

We know Gerard Depardieu has left the country due to taxation concerns, but is France really prepared to go after foreign corporations? Any legislation is far off, but the idea of taxing personal data is akin to limiting the ability of digital companies to use that information to create relevant customer experiences. It cuts into competition.

Sure, in a data-hungry world, such an action would take advantage of the implicit value exchange that’s been occurring on the web for the past decade or so. But at the same time, wouldn’t it rob the consumer of a richer experience?

The idea of taxing data most likely has online companies shouting, “mon dieu!” My suggestion, when it comes to taxing material as beneficial and fluent as data, is mon don’t.

Topics: Online Retailing , Payments , Social Media

Bryan Pearson / Bryan Pearson is President and CEO of LoyaltyOne Inc. and the author of the best-selling book The Loyalty Leap: Turning Customer Information into Customer Intimacy.

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