Insight from around the World: France
ISABELLE SALLARD, EDITOR, INTERNETRETAILING.FR
Last July, the French association for ecommerce, the Fevad, strongly reacted to the proposals of French Senator Marini on the creation of new taxes on digital and ecommerce businesses. The association stated its opposition to the creation of a new tax on online purchases.
For the Fevad, this tax would have a negative effect on household consumption and affect their purchasing power. It said in a statement: "This new tax will directly affect the 31 million French people who buy online. Profit margins are particularly low on the internet, sites will have no choice but to transfer this additional tax to prices. While the government tries to restore the purchasing power of consumers, this tax will impact millions of households particularly amongst those with low incomes who use the internet to find the most attractive prices. This new tax will therefore directly impact the purchasing power of many households and curtail their consumption.”
The association also considers that this tax would be a hindrance to the development of employment and investments in French ecommerce which accounted for half of jobs in commerce from 2006 to 2009.
Beyond the impact on employment and household consumption, Fevad also believes that this law is based on an incorrect knowledge of the ecommerce sector. The creation of this new tax is based on the idea that websites enjoy a high growth of their business which enables them to support this new tax burden. However, according to a recent survey, nearly one ecommerce site in five has not yet reached the threshold of profitability. This is mainly due to the significant investment ecommerce sites have to do to meet customer expectations and the increasingly important competition on the internet.
For the Fevad, “the creation of this tax would certainly weaken the financial situation of many French companies, especially among SMEs that the government wants to develop, and jeopardize their tremendous potential in terms of employment and economic activities."
Finally, to Senator Marini who believes that this tax would restore tax fairness between the physical trade and ecommerce, Fevad recalled that the Board of Trade in France that includes all trade players, is also opposed to the new tax.