A new French tax on gigabytes

The bad old days

I remember when back in the 2000s you were being charged for internet usage by the kilobyte. The 1990s billed you by the minute, similar to how you were charged for phone calls. Then the 2010s came, dropped that, and introduced contracts where you paid for available bandwidth, not transferred data, on both fixed and mobile connections. This was a great development for every internet user.

Suddenly, you could leave your PC on overnight to finish a big download, and use it during the day for work or regular internet use. This was not revolutionary. It was common arrangement with power contracts too, the night rate was usually lower than the day rate, so letting your World of Warcraft update itself at night was not that different to letting your dishwasher run at night.

Everything old is new again

With the new tax, France is regressing, harming internet users, and making telecommunication less affordable, by bringing per-byte billing to life again.

I do not live in France, so why am I concerned? Because governments watch what the others are doing, and bad ideas spread like STDs at an orgy where condoms are an optional accessory, not a necessary precaution. (Good ideas, on the other hand, have much lower transmission coefficient; almost as if the ruling class were reluctant to lessen the burden of interaction with the state and society for the people they govern, but happy to pile obligations and restrictions up on them.)

The proposed tax is €0.055 per each gigabyte of data transmitted to a user.

This does not sound like much, until you realise that:

• a Blu-ray quality 4K film that weighs between 50-100 GB, let's take 100 GB to make math easy, would cost €5.50 extra to watch
• the Steam edition Clair Obscur: Expedition 33 weighs about 55 GB, and would cost €3 extra to install

The 25th anniversary edition of Le Fabuleux Destin d'Amélie Poulain, a 2001 French film directed by Jean-Pierre Jeunet and starring Audrey Tautou as the titular Amélie, costs €52 on Amazon's French website. If it were possible to download the film, the new tax would add €5.50 to the price, and increase the price by 11%. A Blu-ray with the regular, non-anniversary edition costs €15 so the tax on a hypothetical digital download would amount to 37%!

It can be argued that you can still buy a physical disc with the film and avoid the transfer tax. However, with companies moving away from physical towards digital distribution, this argument loses ground with every passing day. It would be only bad if DRM-unencumbered downloads were a typical option, because then you could download a file once and pay the tax once, but corporations seem to prefer streaming, so the tax would need to be paid every time you wanted to watch a film, making the situation even worse.

By comparison, if you wanted your average income tax rate to be 37% in France you would have to earn €300'000 a year. Personally, I do not know anyone who earns this much money, and I think everyone in my Geringverdiener and Les Misérables social circle would classify people who need to report €300'000 when filing their taxes as, maybe not exactly wealthy, but definitely on the richer side.

Thanks to Amendement n°I-1358, which I truly hope will not give any other government in Europe any funny ideas, people in France will be able to feel as if they were earning enough money to buy an apartment every two years when they buy a film to watch.

If you do not feel you belong in the high society of highly-taxed people, you may console yourself with playing a game instead of enjoying a fine piece of cinema. Expedition 33 on GOG will set you back only €49.99, and the new tax, amounting to about €3.30 will only add 6.6% to the price. To have 6.6% as your average tax rate in France you would have to earn €29'050 a year, which puts you roughly 1⁄3 above the minimum wage. Not tres bien, not terrible.

Tax the corps!

The tax is, of course, levied on the distributors of the data ie, the giant tech companies and internet leviathans like Netflix, Amazon, Google, Facebook, etc.

However, I do not think anyone in their right mind believes that the intended taxees will not pass the tax onto their customers the very second it comes into force. Every single tax levied on corporations is ultimately paid by their customers, and this tax will be no exception.

Just look at what happened with the Paketsteuer that was introduced in Austria in October 2026. It is just €2 per package ordered on the internet (notice the curious similarity to €0.055 per gigabyte transferred over the internet), and was supposed to be paid by the e-commerce behemoths.

What was the effect of introducing the Paketsteuer? Amazon, definitely belonging to the e-commerce behemoth category, immediately added a €2.40 charge to every order made on its website. (Why €2.40 if the Paketsteuer is €2? Because Mehrwertsteuer is added to Paketsteuer. It is like roadside robbery, but there are robbers on both sides of the road — double the fun! Or like when insult is added to injury, for those of a more pessimistic and cynical persuasion.)

The tax was not paid by Amazon, but by Amazon's customers. It could not have happened any other way. The effect of the French gigabyte tax will be exactly the same ie, people will have to pay more for services, and the profit margins of corporations will stay unharmed.

The only way out is through

How should the problem of jammed digital highways be solved, if not by taxing people?

After all, various governments try to disincentivise people from engaging in harmful activities by taxing them. For example:

• there are taxes on alcohol, because alcoholism is a debilitating disease
• there are taxes on tobacco, because cancer is a debilitating disease
• there are taxes on income, because... productive activity is a debilitating disease?

I am not sure about the last example, but I hope I have made my point clear. Since the purpose of a system is what it does there is no way of explaining away the fact that taxing internet usage puts it in the category of harmful, disincentivised activities: making something more expensive disincentivises engaging in whatever that something is. (As a side-note, flying private jets is viewed as a desirable activity in the European Union, and encouraged by the tax exemptions on aviation fuel when used for private aircraft.)

What could France, and Europe as a whole, because I expect politicians in other countries to do their worst and copy the idea, do to lower congestion of the digital, transnational express-ways instead of taxing traffic on them?

Lay fiber.

Everywhere.

And then lay more of it, just to be sure.

Fiber to the home should be the standard, with Fiber to the Building used as a last resort when you can't replace copper wires in some centuries- or millennia-old buildings of great historical value.

Every neighbourhood, every block of flats, every house, every shed, tent, doghouse, birdhouse, and public restroom should have a fiber strand. Make terabits as cheap and plentiful as IPv6 addresses.

Build infrastructure instead of taxing it. Productive activity, not taxation, brings wealth and prosperity.

The way out of this congestion dilemma is through the ground, not through the taxman's book. And at the end of the pipe through which you should lay fiber, there is light. We should, collectively, as Europe, go towards that light, not turn our backs away from it.