Head of Digital Policy at the Adam Smith Institute, Charlotte Bowyer, argues that imposing a tax on US internet firms would be destructive to the revenue and innovation of digital firms in the CityAM Forum:
Europe is lagging far behind the US in terms of digital innovation. The US’s technology policy champions experimentation and risk, with the presumption that entrepreneurs should be able to try new things without first seeking permission.
In Europe, the opposite is the case. The proportion of people engaged in entrepreneurial activity is also far lower, and even successful startups tend to be smaller and slower-growing. If the EU is serious about challenging America’s tech dominance, it should cut red tape and taxes, resist the urge to regulate more, and champion entrepreneurship.
Clobbering successful foreign firms that contribute billions to Europe’s economy may raise revenue, but it will do nothing to address countries’ underlying uncompetitiveness. And while some digital firms may be able to handle a higher tax bill, it’s hard to see why they’d put up with such a petulant host. The EU’s politics of envy isn’t just ugly – it’s destructive too.