Colloquium 'Digital economy and taxation: keys to the debate' 'Taxing technology is not the way to reduce public deficit or pay pensions'

    _Daniel Lacalle: “The challenges of digitalization are addressed with training and leading the technological race, not with more and higher taxes”

    _Javier Santacruz: “The digital company does not pay less taxes than other sectors”

    _Miguel Marín: “The Government is overestimating the income it would obtain from the tax to the technological sector”

    _Javier Zarzalejos: “The digital economy is the real economy, and FAES remains attentive to the challenges and opportunities it brings”

    _With this event, FAES inaugurates its cycle on digital transformation

FAES Foundation has inaugurated its new cycle on digital transformation with the celebration of a colloquium on digital economy and taxation. The taxation of large digital companies and the approval by the Government of the bill that will regulate a new tax on digital services have centred the debate, the final maxim of which has been the bad orientation of Spanish and European taxation towards collection and protectionist objectives. "Taxing technology is not the way to reduce public deficit or pay pensions," insisted the participants in the debate, who agreed that any revision of the tax framework must be part of a comprehensive plan.

Daniel Lacalle, PhD in Economics and professor of Global Economics; Javier Santacruz, chief economist of Civismo; and Miguel Marín, head of the Economics area of FAES, took part in the colloquium. They all focused on the need to adapt to the new digital reality through the training for new jobs and the promotion of investment and growth.

Collection and protectionist eagerness

Daniel Lacalle has assured that "the challenges of digitalization are the present, and they are addressed with training and leading the technological race, not with more and higher taxes." In his opinion, "the great risk is to approach taxation from a collection and protectionist point of view, and not from what disruptive technologies mean in terms of added value." In this sense, he has been critical of "the obsession with protecting low-productivity sectors via subsidies and penalizing high-productivity sectors via taxes." "The debate has to start with productivity, not taxation," he claimed.

According to Lacalle, the tax on technology that the government is considering "is closer to a tariff, which discriminates by activity and nationality. "Taxation cannot consist of hindering the quality of the goods and services that citizens receive or of damaging growth," he insisted. On the contrary, he stated that "taxation should encourage investment and leadership of technological change, and not put obstacles to productivity and the pattern of growth. He also stressed that "the debate on where technological companies should be taxed and how much is a global debate that should be settled in the OECD or the WTO, not unilaterally by the states."

In labour matters, Lacalle has affirmed that "technology does not destroy workplaces, it destroys some works," and has noted that, therefore, "we cannot see technological change as a threat to employment but as an opportunity for training and growth. In his opinion, "artificial intelligence, robotization and digitization will create more and better jobs for all."

Damage to a key sector

For his part, Javier Santacruz has assured that "the digital world should not pay the bill for public spending" and has valued the "extraordinary challenge" that the creation of a specific tax represents for the digitalization of the Spanish economy. He describes it as "recklessness" that would cause "serious damage to a market that is in full growth and for which a flexible and dynamic environment is essential."

"The digital company does not pay less tax than other sectors," added Santacruz, who recalled that "digital taxation is an objective of the European Commission," which has proposed a rate of 3%, but that, with the approval of a new tax on digital services, "Spain takes the lead without agreeing with the member countries and without a clear plan of causes and consequences."

Santacruz has explained that the intention of the Government raises divergent points with the position of Brussels, "first because it is formulated as an indirect tax, but introduces elements of direct taxation, which entails a legal problem of double taxation. And secondly because it requires a series of technical means that are currently complex even in the most advanced countries in prevention and tax control, like Spain, where the agencies are not fully prepared for the necessary supervision," he added.

Real economy and opportunities

Miguel Marín has emphasized that taxation cannot be governed by 'social justice' nor can this serve as a justification for the creation of new taxes, and has referred to "the vagueness of the bill," insofar as "the tax has been created before the taxable event. In addition, he has assured that "the Government is overestimating the income it would obtain from the tax to the technological sector. Brussels has an estimation of 5,000 million euros for the whole of the Union, whereas the Government has an estimation of 1,200 only for Spain."

The director of FAES, Javier Zarzalejos, said that "it is no longer possible to talk about the real economy and the digital economy, because this extends to all areas. The digital economy is the real economy. In this sense, the director of FAES has put in value the monitoring that the Foundation has been doing of the advances in the field of the innovation and the digital transformation. With this new cycle of activities, he said, “FAES remains attentive to the challenges and opportunities that the digital sector brings with it, such as the concern for security and the impact on political dynamics, starting with taxation.”

With this event, FAES inaugurates its cycle on digital transformation, with which it wants to shed light on the keys to the debate on the taxation of large digital companies. Although there is consensus on operating a tax reform adapted to the new technological paradigms, it is not so clear what to tax and on what scale, nor how it will affect investment, innovation, employment and consumption. While the OECD, whose proposals do not generate sufficient consensus, is committed to redefining the fiscal framework according to the principles of coherence, neutrality, efficiency and effectiveness, the EU is proposing short-term rules that guarantee equity and favour growth.

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