Boris Johnson backs big tech tax despite Trump's threats, and risks escalating transatlantic trade war

This article was originally published on this site

  • UK Prime Minister Boris Johnson has pledged to push ahead with a tax on large online companies, despite US President Donald Trump threatening to impose tariffs on French goods after France implemented a similar tax.
  • On Tuesday, Johnson said: “I do think we need to look at the operation of the big digital companies and the huge revenues they have in this country and the amount of tax that they pay. We need to sort that out. They need to make a fairer contribution.”
  • The tax would see large online companies face a tax of 2% of UK sales from April 2020, and a pledge to implement it appears in the newly-published Conservative Party manifesto.
  • According to the BBC, the tax could initially raise close to £500 million ($650 million) per year for British coffers.
  • Visit Business Insider’s homepage for more stories.

UK Prime Minister Boris Johnson has risked escalating Europe-US trade war after vowing to push ahead with a tax on large online companies.

First proposed by former UK Chancellor Philip Hammond, the so-called digital services tax would see large online companies face a tax equivalent to 2% of their  UK sales from April 2020. The tax would apply to many of the biggest-name tech firms like Facebook, Google and Amazon. A pledge to implement it appears in the newly-published Conservative Party manifesto.

By implementing the tax, Johnson risks falling foul of Trump, who this week threatened to slap tariffs on $2.4 billion worth of French goods after France approved a similar digital services tax in July.

France’s digital services tax will impose a 3% tax on any digital company with revenue higher than €750 million ($850 million), of which at least €25 million ($27 million) must be generated in France.

According to the BBC, the tax will be back-dated to early 2019, and is expected to raise around €400 million ($443 million) for France this year. Amazon has already retaliated, raising its seller fees in France by 3%.

U.S President Donald Trump and French President Emmanuel Macron.
AP Photo/Francois Mori

The goods the Trump administration is threatening to tax are varied,  though many appear to be quintessentially French

A full list of products facing tariffs has been published by US Trade Representative Robert Lighthizer, with the products listed including cheese, handbags, makeup and wine. 

“We’ve taxed wine and we have other taxes [on French goods] scheduled. We’d rather not do that, but that’s the way it would work. So it’s either going to work out, or we’ll work out some mutually beneficial tax,” Trump said of the proposed tariffs during the NATO summit Wednesday.