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5/31/2006
04:06 PM
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Do The Math: EU E-Mail Tax Doesn't Add Up

Comes now that a French MEP is proposing a tax on SMS and e-mail messages as a way to partly supplement the European Union's general fund. Every time I hear one of these proposals, I have to wonder if people have even done the math on this stuff.

Comes now that a French MEP is proposing a tax on SMS and e-mail messages as a way to partly supplement the European Union's general fund. Every time I hear one of these proposals, I have to wonder if people have even done the math on this stuff.This is what the EE Times reports:

The proposer is Alain Lamassoure, a Member of the European Parliament (MEP) and rapporteur of the European Parliament's budget committee. He has suggested that users of European networks pay 0.15 euro (about $0.20) on SMS text messages and 0.00001 euro on every email, the reports said.

Lamassoure has called a meeting with MEPs from all the EU's 25 member countries for June 21 where the taxation plan is set to be discussed with Laszlo Kovacs, the EU budget commissioner, the reports said.

Setting aside the SMS tax, let's say half of the 550 million citizens in the EU-25 use e-mail at work and/or home, and each of them send 10 e-mail messages per day (these are impossibly high numbers, btw). At a cost of 0.00001 euros per message, that equates to (275,000,000*10)*0.00001 = 27,500 euros in tax revenue per day, or 10,037,500 euros per year.

Now consider the cost of administering the program. The EU-25 has 25 members (obviously) and at least that many languages and dialects that are commonly used, so in basic enforcement terms you're looking at a staff of about 20 persons at the least. Using the rule of thumb that staff costs are three times wages, a "typical" wage of 30,000 euros, and a staff of 20 persons, we come up with a baseline expense of (30000*3)*20 = 1.8 million euros. Using these numbers, the net gain to the EU treasury from this tax would be a whopping 8.237 million euros, which hardly seems worth the effort. And of course, even that pittance would almost certainly be wiped out as a result of the declining productivity that comes from putting a tax drag on e-mail usage, or from organizations choosing to offshore their e-mail servers and talent, thus cutting the very jobs that Europe needs the most. Simply put, this kind of stuff is just self-defeating.

One more thing:

One side benefit of a tax on emails is that it could help reduce "spam".

This is highly unlikely. With a tax burden of just 0.00001 euros per message, a spammer could blast out one million messages for the nice flat fee of 10 euros. Worse, it would legitimize the practice by providing a government payoff. I've argued this point many times, but it just doesn't seem to register with some people--the only fee that will act as a discouragement to bulk e-mail is one that's higher than the cost of printing and distributing leaflets by postage. Anything else will act as an encouragement simply because it's still cheaper than the postal system.

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