In a move aimed at reining in the overwhelming online advertising landscape, the German government is reportedly preparing a draft law for a digital tax, which would target large platforms like Google. According to Justus Haucap, the new economic advisor to Economy Minister Katherina Reiche, such a tax could lead to a more balanced online advertising market, where companies would need to compete more effectively for users’ attention.
Haucap, in an interview with the Rheinische Post, explained that the current situation, where online advertising is dominated by a few large players, leads to a state of “reizüberflutung” or information overload, as companies try to outdo each other in a bid for users’ attention. This, in turn, drives the demand for ad-blocking tools and other solutions, as users seek to cope with the deluge of advertisements.
The proposed digital tax is seen as a way to level the playing field, by making large platforms like Google, which allegedly engage in “geschickte Steuervermeidung” or clever tax avoidance, contribute to the state’s coffers. However, Haucap is not convinced by this argument, pointing out that German companies in other sectors, such as the automotive and chemical industries, also make significant profits abroad and do not pay taxes in the countries where their customers reside.
While the details of the proposed law remain to be seen, Haucap’s comments suggest that the tax could have a positive impact on the online advertising landscape, by encouraging more responsible and targeted advertising and reducing the pressure on users to cope with the overwhelming amount of online advertising.