The Group of Seven Great Powers recently agreed to impose a global tax on transnational companies of at least 15%, and these countries described the agreement as “historic” as it works to better distribute tax revenues to multinational companies, especially giant technology companies.
Major countries and international media hailed the decisions resulting from the meeting as a great achievement and a huge shift that ushered in a new era of policies that will limit the dominance of big technology companies in the global economy. Read also Product quality first.. Marketing tips for startups American companies call for breaking Amazon’s dominance in the e-commerce market How can global corporate taxation destroy tax havens? The G7 reach a historic agreement to end the race to cut corporate taxes
But is this really what will happen in the future, and will imposing new taxes on these companies reduce their monopoly and dominance, or is it just a topical pain reliever, and a temporary solution to the problem?
David Richard, IT and digital economist and CEO of Wan disco discusses this landmark agreement and attempts to answer these questions in an article published by CITYA.M a few days ago.
The writer says that when facing major global problems and challenges, looking from afar at the overall picture of the scene and understanding this picture allows us to make the right decisions that lead to positive and sound results in the end, but sometimes it is difficult to see the wood inherent in the greenery of the tree, and perhaps the most prominent An example of this is the recent meeting of the G7 finance ministers and the decisions resulting from it.
We have seen these kind of major international meetings and summits before to discuss some global problems, such as the meetings that tried to address climate change for example, they dominate the atmosphere, take great media momentum, and create an illusory sense of the progress that has been made in resolving the issue, but climate change It is still a major problem haunting the world despite all the decisions taken in those meetings.
Richard believes that what is happening now is something similar, by focusing so heavily on taxes, governments have found an easy and manageable way to claim to the public that they have taken decisive action, but they know that the results will not be up to the ambition, and they will not achieve much through these taxes in the long run. In fact, the new technology tax is a political game and will do little to curb the enormous power of the tech giants.
The writer asserts that this tax will fail to meet the real challenge posed by the major technology companies in the world through their strong monopolies that control the global flow of data and information. We have now reached a point where the issue of tech monopolies has become very broad and deeply rooted, and governments are trying to break it down into understandable elements of digital taxation, data regulation, and privacy control, in the hope of bringing about change and regaining control, but all of this is pointless.
When we look at the issue in depth, it is clear that all these elements are merely symptoms of the disease and not the disease itself, because the real problem is in the strong monopolies that dominate the market, where it is almost impossible to implement regulations and instructions aimed at limiting the power of these monopolies, and the imposition of taxes may seem It seems like an achievement at this point in time, but in the end it will not be enough.
Richard points out that heavy fines and taxes will do little when dealing with the world’s richest companies, and these companies will move quickly to circumvent laws and identify loopholes, and efforts should instead focus on curbing the enormous power they possess, and their overwhelming influence in the realms of politics and law. And the economy, which they control in an undemocratic way, and this control will get worse the more they are allowed to operate under the current conditions.
Breaking up companies is the solution
During the recent Corona pandemic, major technology companies experienced explosive growth fueled by the digitization of various economic sectors, and the increasing flow of data, which further consolidated their grip on global markets.
On the solution, from his point of view, the digital economist says that instead of taxes, we should focus all of our attention on breaking up monopolies. We have a clear example from the 1990s of how this was done, when Microsoft’s market dominance became a major problem to be solved, as the company faced many antitrust lawsuits, imposed huge fees and fines on it, and then almost disintegrated into two different companies. Because of these issues.
He gives a clearer example is the case of Standard Oil, when it monopolized the oil market in America at the beginning of the last century, and controlled about 90% of it. Regulation – not taxes – forced the dissolution of the company into multiple companies after the Supreme Court issued The US government decided to dismantle the company into 34 companies due to anti-trust cases brought by the US federal government against the company years ago.
When technology companies are allowed to grow to massive size and are able to easily take out competitors, we create a dangerous consolidation of power, stifling competition and inhibiting innovation in the long run.
Richard continues, “We urgently need strong legislative action to divide the tech giants into a group of smaller companies specialized in each field, rather than the pooling of forces that we see in these giant transcontinental institutions, only by this we prevent monopoly and allow competition to take its natural place, and this will stimulate creativity. innovation and prosperity for all.
He believes that large technology companies have taken control of the markets without any real consequences for a long enough period, and it is time for governments to intervene to limit their authority once and for all by addressing the root of the real problem at hand and not its symptoms.