Taxing Data as the New Oil

This article explains why the comparison between oil and data is valid not only with regard to the wealth generated by oil companies and digital giants but also with regard to the legitimate taxation of that income by source states. The author focuses on the parallels between the transformation of crude oil into a wide array of profitable products and the processing of raw data into valuable information (data mining). The author contends that both oil and data are natural resources whose overexploitation leads to negative externalities in communities and territories where those resources are collected. The negative externalities justify the imposition of specific taxes with compensatory purposes—based on Pigouvian and Coasean theories—on oil extraction and data mining. Negative externalities also provide indisputable legitimacy to tax by the state where oil and data are collected. A specific tax with compensatory purposes on data mining would be independent of any general international solution granting taxing rights to market states and encompassing most economic sectors, and is not recommended as a means of circumventing tax treaties.