A few years back, The Telegraph ran an article, “World could see its first trillionaire in 25 years”. The Forbes 2017 lists 2043 billionaires which is about 233 or over 11% from the previous year. Even as governments around the world, including developed countries are striving to provide basics to all its population, there is no doubt that we are finally a billionaire generation. We are producing billionaires at a constantly higher rate, hand-in-hand with higher rich-poor gap. An increasing number of businesses today seem to have an unhindered profiting in the global market. The finances associated with these companies and their promoters are staggering. What is more important is the fact that these businesses are accumulating profits at an accelerated pace. Unprecedented super revenues, particularly by tech giants require nations to reconsider their taxing policies and taxing fundamentals. The situation calls for an unprecedented approach, a tax approach that redefines taxation philosophy from a passive one in existence to a radical one, which the situation today demands.
Governments must wake up to this new concept and primarily understand that it is responsible for reducing the rich-poor imparity in its borders. Addressing this imparity requires them to undertake a clear, definitive, and tangible top-down approach, rather than an undefined, directionless bottom-up approach that lead them nowhere. The new taxing system must be a 180 degrees turn from the existing policies. The objective of this new tax policy would be less focused on what the governments would demand, but rather on how much these businesses can have.
The super revenues of tech companies are a matter of concern that needs to be dealt with newer perspectives. It shouldn’t have reached the situation we see today. Digital products and services are different from that of physical products and services. Tech products like any other raw material, has its costs reflected in the finished products of that particular technology user. If these tech products are sold at low costs, costs that could leverage on its scale of usage, then thousands of various manufactured products world over would have been at a lower cost. However neither did the governments benefit the public by chopping down tech product costs to keep prices low along the product development chain nor did it pocket its legitimate share. The super revenues of today by these tech giants are a result of a lack of sensitivity of the regimes and their policies to public welfare. Their lapse was their inability to recognize the potential of ‘Pure sales and its scale.’
The revenue demand from tech providers requires a multi-strategy, one that is differently tied to different aspects of sales and service. Such a tax system does not just see the holistic revenues and demand a tax, but correlates its tax policies with research spending, new products/services sales, old products/services sales and its volume. The radical approach is based on the philosophy that technology products and services cannot be equated with physical products and services. The taxing regimes for such unprecedented revenues should have begun with a cautious watch and decide strategy by the governments, rather than apply its existing regimes that were not designed for it. Had the corresponding governments effectively established the new policy with a new strong vision in time, at least half the cash these giants have with them in their pockets now would have been in the government treasuries, which should have been the case. Hand-in-hand the promoters too would only have been happy, because like the government and public, they too would perceive the fact that no government would allow anyone make mad profits.
The revenue of these tech giants is one story. However given the scale of acceptance of these tech products a question emerges how come they established such a monopoly. Why did none ever come close to them? Once established, they constantly kept upgrading their products and with time they were perceived to meet the requirements of all users. Having provided more than what people wanted, competitors had nothing to offer. The world perceived their products to be ultimate that kept meeting their requirements. People believed these technologies to have revolutionized their way of working, getting great results at shorter time. With digital technologies, separately or together, people were being able to decide quickly, efficiently, and better. Thus a belief that an ultimate answer to the needs was already there that cannot be replaced by any other. Competition was killed even before it began. However the bigger reality is that it was the technologies, which transformed the way people and the society went about their lives and conducted the world. Business models and business methodologies evolved based on the functionalities facilitated or not facilitated by these technologies. Whether there is still space for similar products to compete the monopoly by adapting and offering technology as alternatives or choices in a dynamic world, is anyone’s guess. The challenge is not in how to adapt them but knowing what to adapt to and why.
As man progresses on the face of the Earth, we as human beings constantly reach new frontiers in all walks of life. We also go about constantly setting new walks which others soon follow. At such points we as mankind must introspect the situation at hand and determine its relevance to the rest of the world. The UK’s House of Lords, for instance has several classic debates and decisions in its history in deciding the future course of man on emerging topics. The point here is that when digital technologies evolved, governments failed to realize the fact that these technologies, their products, their sales, and revenues cannot be on the same lines as that of a physical product. The current development at hand that is breaching the frontiers of human standards and understanding must be studied against the existing scale for its adoption and consequences. The scale with which we analyze and evaluate the developments is itself constantly changing too. For instance our gradation scale of today says child labor is unacceptable but there was once a time when we had separate labor laws for child employees. So later when we perceived it as unacceptable, we went back to correct it. Tech super revenues or non-tech super revenues, governments need to tackle this with a new vision. Accordingly governments must get back and make revolutionary changes keeping in mind the emerging philosophy of profits, the rising economic gap among people, and the nature of technology. Reducing rich-poor divide requires a new vision at every level. Nations and global trade bodies must move away from the habit of seeing economy through indicators like GDP, but emphasize on indices relating to poverty, poverty reduction, and rich-poor divide. Working and emphasizing on these factors should make a nation more robust and bring better economic harmony.
