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Need money? Just sue a tech giant

28 July 2020

Tech giants like Google, Microsoft, Amazon et al are turning into a great souce of revenue for cash-strapped governments around the world.

Unfortunately, that revenue isn't coming from the taxes levied against billions in profits because many corporations are dodging that liability very effectively by shifting those profits to low-tax havens.

Although there has been much talk about various countries (including NZ) introducing "digital taxes" on turnover, this hasn't been particularly successful either. Most of those "threatening" those taxes have simply failed to follow-through with any action.

So how do governments get their pound of flesh from huge multi-national, tax-dodging corporations?

Well it seems that the most effective way is to simply fine them through the courts.

Google, Amazon and Microsoft collectively been hammered to the tunes of many hundreds of millions over the years and it seems as if this is just a cost of "doing business" these days.

Whilst it might be difficult to claw back taxes lost to things like the Dutch Sandwich and Double Irish strategies for legally reducing the amount of tax these huge corporations pay, it's a pretty simple task to simply fine the same corporations for any violations of privacy, anti-trust or other laws. Hence, this seems to be the tactics employed by a growing number of countries.

Most recently, Australia has alleged that Google has violated data privacy laws so the regulator there is seeking to levy fines "in the millions" against the search engine and advertising giant.

Until the arrival of CV19, I suspect that most of the fines and penalties levied against these giant corporations were well intentioned and designed to act as a deterrent to repeat offending. Now however, as all the world's governments go into huge deficits to fund their bail-outs, I have a sneaky feeling that we are going to see the threshold for issuance of these mega-fines fall significantly.

Need a few hundred million dollars to fund something really important (like new furniture in the halls of power)? Simple, find some minor transgression on the part of some uber-rich corporation and ping them for it. The great thing about sumary fines is that you don't even have to waste time in the courts debating the facts.

Governments will be reluctant to hike taxes because, even though the great unwashed masses are likely expecting tax increases in the wake of all this, any political party that goes to the polls with the promise of higher taxes is at an obvious disadvantage. You're far more likely to get onto the benches of power if you simply dip into the pockets of big corporations by flexing your power to fine them for almost anything.

From the corporate perspective, they're going to have to spend a *lot* of lobbying money avoiding those fines -- so either way it's going to be a very costly exercise for them.

Once the politicians have been bought-off and the huge corporates purchase immunity from the law (again), you can bet that governments will start coming after the smaller fish who have no defenses. I would not be surprised to see the range of fines and penalties that "regular folk" must pay for their transgressions, hiked significantly in the coming years.

All that money which has been spent supporting businesses and workers has to come from somewhere and quantitative easing only goes so far. Besides which, who cares if the lawless and careless shoulder the bulk of that burden by way of the fines they pay?

Interesting times ahead?

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