Market: “Sword of Damocles” Europe-wide e-commerce tax?


Rapid increases in profits for almost all of the world’s e-commerce groups are giving rise to serious discussions about an e-commerce tax. The reason: while the corporations are raking it in, retailers and small and medium-sized businesses are falling by the wayside. Inner cities are becoming deserted, and not just because of Corona, and the after-effects of the pandemic are expected to drive thousands of companies into bankruptcy. Calls for a “digital tax” or “e-commerce” levy are growing louder – across Europe, across the world. Surely it would be fair if the big winners of the crisis made their financial contribution to the recovery of market economies worldwide – yet for many small e-commerce businesses like online printers, it would be another kick in the backside. What’s in store for online print?

Zalando reports 127% more profit for 2020, Deutsche Telekom +16% (800 million euros), and Amazon grew 40% globally, increasing profit to 84%. Corona is showing its ugly face – because while many companies are suffering massively from the social impact, online capitalism is “eating its children”. For example, most online print service providers, which serve precisely those companies that are suffering most from the crisis with their products, have experienced sales slumps of biblical proportions in 2020. No events, no catering, fewer store opening hours – all of this naturally has an impact on the advertising power of the companies affected. The bottom line: print orders failed to materialize. It was not uncommon for annual sales to be almost halved – in some months, some online print service providers had to record a minus of 80%. Dramatic.

On the other hand, the big e-commerce groups are massively increasing their profits. This would actually be fine if the online giants didn’t exploit every opportunity to save on taxes and duties. One example: Across Europe, Amazon generated a plus of 36 percent in 2020 – but reported a loss of 1.2 billion euros. The result, according to SPIEGEL research, is that Amazon pays 240 million less in profit tax to the tax authorities. How can that be? If you look at the flow of goods of the group, you might think that so much is transferred back and forth between the individual Amazon companies until one “demonstrably” earns nothing more. The OECD suspects that this behaviour and other “agile tax-saving measures” cause countries worldwide to miss out on $240 billion a year. To the advantage of the corporations – to the disadvantage of the respective countries. No wonder, then, that the International Monetary Fund is the first to initiate a global tax debate.

Now, one might assume that this is only about large online corporations. But one is all too quickly reminded of the unspeakable developments surrounding the DSGVO (Data Protection Regulation). The DSGVO, originally planned to diminish the power of global data octopuses like Google and Co but is primarily hitting smaller companies hard. Sure, the framework of the GDPR makes sense, but what does a financially strong, global corporation care about abiding by a few rules? A medium-sized company, on the other hand, is often overwhelmed by the organizational and, not least, the financial requirements that this law entails. Is a similar, or even worse, scenario now looming with regard to a possible, state-driven e-commerce tax or digital levy? It’s inconceivable if a surcharge were automatically charged on every online order – regardless of the platform. Even a different sales tax rate would be more than daunting for online entrepreneurs.

What might appear to some, perhaps more traditionally oriented entrepreneurs, as a balancing justice – because “at last, the online printers have to pay more” – would be devastating for the online print industry. The reason: online print is so inexpensive because the companies involved have invested large sums of money in making print production more efficient and automated. This makes it possible to offer lower prices – but profits also have to be generated in order to finance the next investment cycle. Ergo: If a flat-rate digital tax were to be imposed on all online businesses, it would be a global slam on the brakes in terms of the digital transformation of our society. The winners: once again, the large online corporations that can afford additional costs anyway. The losers: all the courageous entrepreneurs who are investing massively in the transformation in their industry. And that means there is another loser: society, because while the large digital corporations also provide jobs, the engine of our society is and remains the small and medium-sized businesses – and that is where most employees earn their income.

What would be the objection to a “general levy” – for example, a surcharge of just 1.00 euro per online order or online delivery? This is where it hits many small digital entrepreneurs in particular, who are struggling hard to make a small margin. The online printers who offer affordable and very inexpensive products such as business cards. One euro more or less can actually decide here whether a price is considered reasonable by a customer or not. And: Wouldn’t such a levy be unfair? It is the end user who has to pay it.

My Take: You can’t proclaim the brave new digital world and act completely selfishly. If you take money, you have to contribute to the maintenance of a society. We call that taxes. Those who don’t – and that’s exactly who they are – must be asked to pay accordingly. Of course, you can disrupt large areas of business, but if you don’t consider the social effects, the future will be, let’s say, semi-beautiful. We, as a society, are drifting more and more into a division: Those who can afford digital – and those who are not financially strong enough to do so. That’s not healthy for anyone. Therefore, if we want to continue to transform in a healthy way and move our society forward, we must not forget anyone or even leave others behind. Everyone must do their part, but not with blanket laws or levies, but with targeted measures in which the pandemic winners and the big earners of the digital transformation are “motivated” to contribute their share to securing our society. This discussion is still in its infancy. But 2021 is an election year – BVDM, bevh, the Online Print Initiative and all the associations and federations that represent our interests – should start raising awareness in politics and society in precisely this area. So, the following applies: “Yes” to financial compensation for the big winners of the pandemic – “No” to flat-rate levies for end consumers and SMEs.
Market: "Sword of Damocles" Europe-wide e-commerce tax?
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Market: "Sword of Damocles" Europe-wide e-commerce tax?
Rapid increases in profits for almost all of the world's e-commerce groups are giving rise to serious discussions about an e-commerce tax. The reason: while the corporations are raking it in, retailers and small and medium-sized businesses are falling by the wayside. Inner cities are becoming deserted, and not just because of Corona, and the after-effects of the pandemic are expected to drive thousands of companies into bankruptcy.
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Founder and CEO of zipcon consulting GmbH, one of the leading consulting companies for the print and media industry in Central Europe. The technology and strategy consultant and his team actively support practical implementation in a wide variety of customer projects. His work involves developing visions, concepts and strategies for the players active in the print production process across a wide range of industries. His areas of expertise include online print, mass customization, strategy and technological assessment for print, and the development of new strategies in the print and media environment. Bernd Zipper is the creator and chairman of Initiative Online Print e.V. and, in addition to his consulting activities, is an author, lecturer and sought-after speaker, orator and moderator. His visionary lectures are regarded worldwide as trend-setting management recommendations for the print and media industry. (Profiles also in Xing, LinkedIn).

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