Trade

Britain to Also Ignore Trump On Digital Taxes

JM Ashby
Written by JM Ashby

Trump has threatened to impose tariffs on more British goods in addition to what he has already imposed if the nation moves ahead with a tax on digital services, but British treasurer Sajid Javid says they will be imposing a small tax on digital services companies like Google and Facebook.

The Trump regime has also said that drafting a trade deal with a post-Brexit Britain could be derailed by the digital services tax and Treasury Secretary Steve Mnuchin appeared in London over the weekend where he reiterated Trump's threat to impose tariffs on British vehicles if they impose the tax.

U.S. Treasury Secretary Steven Mnuchin said on Saturday in London that he was optimistic that a bilateral deal with Britain could be reached as soon as this year.

But Mnuchin gave up no ground after a second meeting with his UK counterpart, Sajid Javid. Javid has insisted that Britain will proceed with a unilateral digital services tax, despite a U.S. threat to levy retaliatory tariffs on British-made autos.

Mnuchin told reporters after Saturday’s meeting that such taxes would discriminate against big U.S. tech companies like Alphabet Inc’s Google, Apple Inc, Facebook Inc and Amazon.com.

I'm sure I've said this before but the idea that a digital services tax discriminates against American businesses is nonsensical.

Companies like Google and Facebook have far more users based outside of rather than inside the United States. The vast majority of their users are outside the United States. These are massive, global corporations with billions of users who live in countries like Britain, but they are coincidentally based in the United States and controlled by Americans.

The digital services tax that Britain and other European countries are considering would only apply to services supplied to users inside those countries and in that context it's no different than any other tax for any other kind of service.

To say that other countries cannot tax business and services inside their own borders is to say they aren't sovereign nations; Trump is saying they aren't allowed to make their own decisions about their own economies.

The digital services tax in question is a very small tax of just 2 percent. Trump has already imposed tariffs on British goods following the World Trade Organization's (WTO) ruling against subsidies for Airbus.

There's virtually no chance there will be a trade deal between the U.S. and post-Brexit Britain this year. Moreover, post-Brexit Britain may not even be a thing this year as the nation will remain within the European customs union until new rules for trade and immigration are agreed to.

British business minister Andrea Leadsom also says they will move ahead with the tax to ensure that massive multinational companies "pay their fair share."

“There are always tough negotiations and tough talk but I think where the tech tax is concerned it’s absolutely vital that these huge multinationals who are making incredible amounts of income and profit should be taxed and what we want to do is to work internationally with the rest of the world to cover with a proper regime that ensures that they’re paying their fair share.”

Under the British plan, tech companies that generate at least 500 million pounds ($657 million) a year in global revenue will pay a levy of 2% of the money they make from UK users from April 2020.

  • muselet

    In the real world, the digital services taxes France and the UK have in the works are entirely reasonable and do not discriminate against US companies. Only in the overheated imaginations of Donald Trump and the band of economic nincompoops he surrounds himself with does imposing tariffs in retaliation for taxing services make any sort of sense.

    To say that other countries cannot tax business and services inside their own borders is to say they aren’t sovereign nations; Trump is saying they aren’t allowed to make their own decisions about their own economies.

    The sooner the Trump era wheezes to an end, the better for the world.

    –alopecia

  • katanahamon

    Amazon sure is convenient…but… I ordered some organic rice that isn’t available in my local shop, and three of the packs (16 Oz) came in a giant box with approximately eighty five hundred feet of cushion air wrap, the box marked “heavy,” which it wasn’t, and the fourth pack came in a separate, slightly smaller box with proportionately the same packing material. All materials were brand new..new cardboard and plastic packing. I’ve decided to only order what’s really necessary and otherwise unavailable to me, as the amount of packaging and transportation issues like fuel and pollution must be adding up spectacularly. That and the unbelievable profits they are making (and how, with low prices and “free” delivery?) yet working conditions and pay being not so great. Being disabled I relish the few times I drive to the store, and see myself in the future using delivery services when my health warrants, but, I’m getting a funny feeling about Amazon, it’s prices, services, etc. I’m thinking there is a terrible hidden badness coming to the economy..