New Study Raises Questions about European Commission Proposal to Tax Digital Companies

A new study by the European Centre for International Political Economy raises five questions about the European Commission’s proposal to place a new tax on the revenues of large digital services companies that the Commission has not answered. This study follows a previous report showing the Commission’s justification for the new tax (that digital companies are undertaxed, or have caused tax collections to slump) is not supported by the underlying data. The author of the new study, Dr. Matthias Bauer, analyzes the proposed tax on digital services using economic evidence of other business taxes. He finds that such a tax would likely lead to many negative, unintended consequences, and that the European Commission should consider these negative effects before proceeding with the new tax. Who would pay for the digital services tax? The study notes that the Commission has not addressed one of the most critical aspects of tax policy: economic incidence, or who actually…

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