Are the EU’s institutions superior to national administrations in formulating policies on the basis of data, facts and empirical evidence? Or are they equally prone to ideological impulses and organisational self-interests? The European Commission’s online communication campaign for a special tax on certain digital business models, which is explicitly intended to manifest citizens’ perception that digital companies don’t pay their “fair share of tax”, should concern those in favour of evidence-based policymaking in the EU.
In politics, storytelling has always been more than just a way of killing time.
In politics, communication matters for success more than in any (other) business. Social online media are increasingly used by political parties, individual politicians and public institutions to launch, steer and control “their” political narratives. This is true for taxation too. In September 2017, the European Commission’s Tax and Customs Department (DG TAXUD) and Pierre Moscovici, the current EU Commissioner in charge of taxation, launched a heavy political communication campaign to promote the idea of a new tax on certain digital services. One of their major tools for policy advocacy: Twitter. Their major argument: digital companies do not pay their fair share of tax. Their problem though: the numbers presented for “effective corporate tax rates” were indeed shocking, but they were simply wrong, underestimating real effective tax rates of digital companies by up to 20! percentage points.
Whether deliberately or not, the numbers were disseminated in eye-catching info charts and snazzy bubbles depicting a huge tax gap between traditional, non-digital businesses and digital businesses. Moreover, smugly quoting its constructed numbers, DG TAXUD, Commissioner Moscovici and others spread impactful video messages to promote the idea to tax digital companies.
In the Commission’s forceful political communication campaign, the major psychological angle is tax fairness. Concepts of fairness, to borrow from Machiavelli, often “serve to veil the facts” and are often intended “in such a way that no one become[s] aware of it.” However, rather than making their case on the basis of facts, the European Commission(er) seems to have been guided by the overarching objective to manifest citizens’ perception that digital companies don’t pay their “fair share of tax” – perhaps aware of the fact that Fake News and falsehoods win on Twitter and Facebook.
My research at ECIPE has shown that, from the very beginning, the idea for a digital tax has been promoted in a heavily biased and therefore misleading way. What was sold as a contribution to tax justice, is actually based on false accusations directed at digital businesses – based on numbers made up by the European Commission tax and customs department.
How should advocates of evidence-based policymaking respond?
Aware of the misconceptions spread by the Commission, I attempted to objectify (and de-emotionalise) the debate through the promotion of our findings on Twitter. Me and my colleagues at ECIPE initially began to share links to our study on Twitter and raised questions about the reasoning, (hidden) agendas and actual credibility of EU policymakers.
Reactions from journalists and business representatives were very positive indicating that we were hitting the right nail. Moreover, we observed a clear change of sentiment in the comments made by interested users on Twitter. Before we started to actively engage in the discussion about a #DigiTax online, users’ opinions about the initiative were more or less split about whether they like the Commission’s ideas or not. Admittedly, using the response function, many users already denounced the Commission’s plans with strong words before we became active. Yet, when we directly replied to tweets sent through several official accounts of the Commission, the number of users welcoming, i.e. liking or retweeting the Commission’s proposals, fell sharply. In most cases, user interactions came to an abrupt end.
But there have been indirect effects too. Representatives of media started to approach me asking for background information. Representatives of business, civil society and international organisations like the OECD approached me with comments, suggestions and invitations to conferences. Aware of the misconceptions of the Commission, one media outlet contacted the author of a study commissioned and misquoted by the European Commission to make its case. The academic made clear that “it is not correct to state that the digital sector is undertaxed.”
Evidence-based policymaking instead of policy-based evidence-making
The debate about taxing digital companies goes on. EU policymakers still promote wrong numbers, aware of their deceptive impact on Twitter-savvy media representatives, citizens, and public opinion, respectively. Even in the era of social media, public debates about political reform initiatives are to the largest extent driven by corps of politicians, civil servants and the representatives of opinionated (N)GOs calling for more government powers and higher taxes.
There’s a great need though to question these calls and their underlying reasoning, as there is a great need to question organisational self-interests in governmental institutions. Decrepit governance structures and insufficient transparency and accountability in the spending of tax money deserve much greater attention, but only rarely make the headlines in social online media. At the same time, “policy-based evidence-making” must not remain or become a best practice for policymakers in the 21st century. This is why advocates of evidence-based policymaking need to engage in policy debates with data, facts and active engagement in social online media.
In this series of blog posts, we would like to present initiatives and practices aiming at promoting free trade within society.