Digital economy is growing threat to revenues
ONLINE shopping has become the thing to do.
We all, virtually without exception have purchased something online in the last few years.
After all, it is so easy, why wouldn’t you. You don’t even have to leave your armchair, or dare I say, your bed to shop for anything, festive presents, homewares, fashion, groceries or even takeaway food.
Of course, we rationalise our purchase, that there is wider choice online, that it is so convenient and of course, it is far cheaper.
Sure why wouldn’t it be cheaper, online stores, don’t have the costs associated with real high street stores - premises, rates, bills, displays, staff - a warehouse in the middle of an anonymous industrial estate is a far lower cost business model.
But have we ever thought of the long-term damage that we are doing to our society.
Fewer and fewer shops in our town centres, fewer jobs for our young generation, less tax revenue to pay for our schools, hospitals and roads.
Yes that’s right, less tax revenue, because a lot of the goods purchased online are not always subject to VAT or the company from which you are purchasing is not an Irish based company, even if it has an .ie domain. The revenue leaves these shores and there is no gain to the Irish economy or to the State.
The digital economy is developing so fast that it is becoming a very real threat to the traditional global economy and the OECD is concerned that States will be starved of cash, as the traditional revenue stream from VAT and corporation tax dwindles.
We are seeing a remarkable situation where huge corporations are richer and can generate more revenue on an annual basis than nation states.
That is part and parcel of a capital society and open economies such as Ireland, but what about the requirements of nation states to fund healthcare, education, law and order and all the other costs not to forget social welfare commitments, pensions, children’s allowance, carers allowance and unemployment benefit.
The European Union and the OECD are trying to address this growing problem and looking at ways in which to stem the tide and ensure taxation continues to flow from the digital economy.
Our individual online shopping habits have a local micro-effect in our local community but there is much larger macro-effect at play and if trends continue at the current pace, there will be much greater and deeper issues for society and nation states starved of funds but with the same social
THE DIGITAL ECONOMY IS DEVELOPING SO FAST THAT IT IS BECOMING A VERY REAL THREAT