GAFA tax: Companies have received their tax notice

"Companies subject to this tax have received a tax notice for the payment of the 2020 installments," said Bruno Lemaire. Not to mention the possible wrath of the American authorities, the GAFA have already taken the lead. Here's how.   The negotiations on the digital tax at the OECD have come to naught. “We had suspended the collection of the tax until the OECD negotiations were concluded. This negotiation failed, so we will collect a tax on the digital giants next December, "explained Bruno Le Maire, the French Minister of the Economy, in mid-October. "Companies subject to this tax have received a tax notice for the payment of the 2020 installments," the Ministry of the Economy said today. Facebook and Amazon "are among the companies" which have been notified "in recent days", assures for its part the Financial Times. So after firing the first ones, what should the French authorities expect from now on? Has

COVID-19: Marshall Plan needed for small businesses

We are at war against the Covid-19. If the money put on the table by governments to help businesses and workers is capital, we must now think about rebuilding our economy in the long term (not to be confused with its reopening), which will be partly in ruins emerging from this crisis and where the lives of small businesses will be disrupted for years.
COVID-19: Marshall Plan needed for small businesses

In short, a colossal war effort will have to be followed by a major reconstruction effort as after the Second World War with the famous Marshall Plan of the United States (from April 1948 to December 1951). Valued at the time at 13 billion US dollars (G $ US), it contributed to the reconstruction of 17 European countries.

This initiative has been a success, experts agree. Beneficiary countries, including France and West Germany, experienced a 15 to 25 percent increase in their GDP during this period, according to the Britannica Encyclopedia.

The plan greatly contributed to the rapid renewal of the chemical, engineering and steel industries of Western Europe. He also ensured the political and democratic stability of the continent while blocking the way of communist ideology, while the Soviet Union occupied Eastern Europe.

In today's dollars, the Marshall Plan’s US $ 13 billion is estimated to be around US $ 142 billion, according to estimates by the World Economic Forum.

Many will point out - with good reason - that this sum is much lower than the funds released by the governments in Europe and in North America to fight the Covid-19 and to hold at arm's length their economy.

The European Union and its member countries have injected US $ 3,000 billion. In the United States, the Trump administration has signed a US $ 2,200 billion bailout. And in Canada, Ottawa has already raised more than C $ 260 billion, which excludes aid from provinces like Quebec.

However, this mountain of money represents the war effort, not the reconstruction effort.

The nuance is important.

Because it goes without saying that the war effort of the Americans to fight the Japanese in the Pacific and the Germans in Europe during the Second World War was much more than the $ 13 billion spent by the Marshall Plan to help rebuild the Europe.

In 1940, the defense budget of the United States represented 1.4% of the GDP. In 1945, it exploded 37%, according to the work of economist Price Fishback, professor of economics at the University of Arizona.

Also, even if Ottawa and Quebec City are currently spending tens of billions of dollars on the war effort, it is in their interest to draw inspiration from the Marshall Plan to help small businesses in the reconstruction and stabilization phase of our economy.

Because they will be faced with a very difficult new environment, underlines in an analysis Stéphane Marceau, the CEO of Thinking Capital, a major non-bank supplier of credit to small Canadian businesses, such as restaurants, small retail stores or independent entrepreneurs.

On the phone, he explains how difficult the crisis is for entrepreneurs across the country.

For example, internal data from Thinking Capital indicates that sales of payment terminals for Canadian small businesses fell 60% from a reference week in early February.

“The situation is tragic at times. I often talk to people who cry on the phone, ”he says.

In his analysis (The future of Canadian small business on the other side of the Covid crisis), Stéphane Marceau says that Canadian small business will face five new realities in the coming months and years.

Reality # 1 - Social emergence will be gradual and small businesses will have to work on reformulating low-income business models for at least a year.

Reality # 2 - Small business owners will face a consumer base with significantly reduced purchasing power and generally restrained consumer behavior, even after the economy reopens.

Reality # 3 - Changing consumer behavior and altered supply chains will create disruptive and promising opportunities for the small businesses of tomorrow. A new wave of start-ups and transformed businesses will emerge to respond to new market paradigms.

Reality # 4 - Many small businesses that will survive the crisis will face the daunting prospect of extricating themselves from a mountain of debt accumulated as a result of the crisis, and for many of them, bankruptcy may be the only option.

Reality # 5 - Increased government intervention in the economy of small businesses will be necessary and assumed for some time.

Small businesses employ 7 out of 10 people in the private sector

The stakes are high for our economy.

In Canada, there are no less than 1.2 million small businesses that generate more than 40% of the GDP in the private sector. They employ 7 out of 10 workers still in the private sector, according to Statistics Canada.

Also, their financial health is essential to ensure the vitality of our economy, especially in remote regions, where large companies are less present.

According to Stéphane Marceau, targeted intervention by governments over several years - like the Marshall Plan - is all the more relevant in a context where economic recovery will not take the form of a V or a W, "but rather that of a very stretched U, with a bar on the right evolving in a sawtooth ».

Because, in his eyes, a return to normal life without social distancing and without health measures is not really possible before the development of a vaccine, a process which could take 12 to 18 months, depending on the industry pharmaceutical.

Moreover, the marketing of a vaccine will not mean the end of the economic and financial difficulties of the entrepreneurs, underlines the CEO of Thinking Capital.

According to him, four actions in the short and long term are necessary "to protect small businesses and the communities they serve".

Four actions to “protect” small businesses

Action # 1 - Governments must distribute aid much more quickly to small businesses.

Action # 2 - Governments must alleviate the debts of small businesses, for example, by waiving all of the loans made under the Emergency Account for Canadian Business program.

Action # 3 - Governments must stimulate aggregate demand, while customers will shrink in the recovery, not to mention their purchasing power which will be depressed.

Action # 4 - Public and private finance players must increase access to capital to support the recovery, as banks (reluctant to take risks for small businesses under normal circumstances, according to Thinking Capital) risk withdrawing the riskier market for small business financing, as they did after the 2008-2009 recession.

It’s a matter of time before we win the war on the Covid-19 pandemic, experts say.

It remains to be seen, however, whether we will be able to win socio-economic peace.

Will we have won a great victory if at the end of this collective fight against the coronavirus tens of thousands of small businesses suffer from economic difficulties and have to go bankrupt?

Will we have a great victory if the Amazon and other Walmart and Costco of this world substantially increase their market share, thereby weakening the socio-economic fabric in the communities?

Will we have won a great victory if economic inequalities - which were already growing before the pandemic in Canada as a whole and in Quebec - worsen in the years following the end of the pandemic, accentuating instability and grumbling popular?

This is why we must now think about rebuilding our economy, while taking inspiration from the Marshall Plan.

This reconstruction effort will be less expensive than the war effort, but it will be very structuring for the economy and society.

This is the great lesson of the post-war period in Europe