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    Red Tape Chronicles: Proposed ‘privacy tax’ would penalize firms that profit from consumers’ data

    Red Tape Chronicles looks at a proposal by the French Ministry of Finance concerning a “privacy tax” that to promote consumer data protection:

    A groundbreaking new “privacy tax” could stem companies’ abuse of consumer privacy, argues a report commissioned by the French government.

    The proposal, detailed in a report issued by the French Ministry of Finance on Friday, has been compared to a carbon tax designed to dissuade polluters, as envisioned at the Kyoto conference in 1997 that set global emissions caps.

    The French study recommends that companies which misuse or fail to protect consumers’ datawould have to pay a punitive new tax, with the rate rising along with the severity of the misstep. It also provides incentives to firms that exceed current regulations to protect consumers’ information. [...]

    “It’s a very revolutionary and interesting proposal, but it would be hugely difficult in France, let alone around the world, to implement,” said Winston Maxwell, a privacy lawyer based in France. Maxwell wrote about the proposal for at the Chronicle of Data Protection blog, published by his law firm, Hogan Lovells.

    Sin taxes have long been used to discourage behaviors that governments deem legal but undesirable — tobacco taxes, for example. The report itself compares this new privacy tax to the concept of a carbon tax, which grew out of the 1997 Kyoto Protocol on climate change. Carbon taxes and credits are included in the agreement as a means creating market pressures to incentivize companies to reduce greenhouse emissions.

    The report argues that Google and other companies acquire consumers’ personal information essentially for free, and use it to make a profit. This creation of value creates the authority to tax, the report argues. [...]

    There are myriad problems with creation of a privacy tax, however. It’s hard to imagine a government agency could adequately rule which companies were effectively protecting privacy and which were exploiting it. Doing so might itself involve a privacy invasion, Maxwell noted.

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