UK Possibly Exploring "Google Tax"

The UK government is considering proposals that could hit Google and other search engines with an online advertising tax to help boost revenue for the BBC. While these proposals are still in their infancy, some are already attacking the idea of taxing a growth industry in the middle of a recession. "Sources say the proposed taxes have been discussed by officials at the Department for Business, Enterprise & Regulatory Reform and the Department for Culture, Media and Sport. They would also have to be approved by the Treasury before they could be introduced. The chair of the culture, media and sport committee, Conservative MP John Whittingdale, dismissed what he called a 'windfall tax' on search engines."

Comments

Taxes have that effect on people

[RobotRunAmok]

This government is actually moronic enough to make me wish the Tories were in power.

On this side of the pond, I was fascinated recently to see the number of tax protests being organized by local elected Democrats. It suited the national media's agenda to portray the tax protests as some kind of right wing/redneck phenomenon, but it was clear to anyone on the ground that it cut across the whole political spectrum.

Why Not Just Advertising?

[Bob9113]

Why specify online advertising? Why not tax advertising in general?

Advertising is hypothetically good because it increases the quality of information available to the consumer to make purchasing decisions. In practice, it typically does the opposite -- creating artificial demand -- particularly in industries like medicine and law where it is more difficult for the customer to be informed. It still serves a purpose, but it does have a negative external cost to society in reducing the quality of purchasing decisions. So, recapture that external cost the same way we recapture the external cost of pollution. A tax is a way to offset the negative externality.

More simple option; just remove advertising from deductible expenses.

See Also:
http://en.wikipedia.org/wiki/Externality

Disclaimer: I work in the advertising industry, and a tax on advertising like I propose would actually hurt the company I work for. So, selfishly, I'd rather you ignore the rational basis for this post.