Should e-commerce deliveries be taxed?

Last June, a draft legislation was presented to the French Assembly, followed by the Senate, aiming to establish a new tax targeting the e-commerce industry, whose turnover is set to surpass €100 billion next year. Why? Is this a viable source of revenue, or merely an economic risk for some companies?

Tax on e-commerce deliveries: opportunity or economic risk?

Of course, FEVAD (the French Federation of e-commerce and distance selling), is against this move. It’s easy to see why, given that they work to defend businesses and notably any efforts which allow consumers to order more products as easily as possible, whether they live in urban or rural areas. Initially planned as a 50-cent flat rate per kilometre covered, the tax is now calculated as a percentage of the selling price on a variable scale taking into account factors such as zones and distances covered; the higher the distance covered, the higher the rate of taxation.

The different arguments proposed

The arguments proposed by members of parliament on the proposed change in law are multifaceted, and so require a closer examination.

1.The environment:

excessive deliveries bring with them an increase in air and noise pollution. It’s difficult to pick a side in this argument – should consumers continue travelling several kilometres in their own cars, or would it be better to distribute shipments and reduce the number of individual journeys by optimising delivery drops by sharing people’s vehicles, using drones, or robots powered by renewable energy?

2.The city centre economy:

has e-commerce destroyed small traders in the same way that mass distribution did during the last thirty years of the 20th century? Yet again, the controversy remains. Changes in urban consumer habits show that they prefer to remain closer to their home to do their shopping, rather than face traffic jams to get to their nearest shopping centre. On the other hand, one could argue that what saves the trader is, above all, their professional knowledge and the quality of the relationship they have built with their clientele. If not, how can we explain the success of food trucks?

3.Make the Big Four tech companies pay their share:

for years, France has focussed on the recurring issue of the fight to reclaim missing tax revenue which large American companies often avoid paying. Of course, Amazon’s success (among others) leads one to believe that imposing slightly more taxation doesn’t automatically hinder performance, given that they could report a lower turnover to the government as a result. Equally, the tax will apply to French SMEs which are just beginning to forge their way in the wake of American enterprise, despite doing so with much lower profit margins. Taxes have never killed off the richest of companies. Rather, don’t they penalise the ones below them instead?

The issue of regulation is also important for e-commerce, an industry which flourishes thanks to the internet and which crosses borders and customs tariffs as quickly as a satellite connection. Wanting to tax those who profit from free enterprise is a popular, though dangerous reflex. Meeting a client’s needs remains imperative for any trade, and it doesn’t seem clear that a tax on delivery rates could well change expectations and retail consumer habits.

Jobs in the logistics and delivery sectors are booming and e-commerce sales represent only 10% of global trade at the moment. At present, a new tax doesn’t appear entirely necessary, and there is nothing to suggest that it would have a positive impact – something which members of parliament have suggested themselves. Developing new technologies to reduce the negative impacts of deliveries would appear to be a step in the right direction…

 

To read also : Free online delivery – who foots the bill?