Last month the UK government revealed its plan to levy a two percent tax on the revenues of tech giants like Google, Amazon, and Facebook. The Trump administration, in response to the plan, is reportedly ready to walk away from an agreement that newly inaugurated Prime Minister Boris Johnson is relying on heavily with a no-deal Brexit fast approaching.
According to the Telegraph, the White House has demanded that the British government drops its so-called digital service tax on US tech companies, threatening that it would tear up the would-be free trade agreement between the two countries.
Sources told the UK news outlet, “the threat has been communicated to the UK Government ‘at multiple levels’”. Apparently, aside from implicit warnings from inside the Trump administration, key US lawmakers have also publicly indicated that they could halt negotiations about a free trade deal.
Ron Wyden, key Democrat on the Senate finance committee, told Bloomberg News had warned officials in the UK that imposing the tax would end the possibility of a post-Brexit trade agreement.
“I met with the UK officials earlier, and said ‘You expect a trade agreement with the United States and the UK It will not happen with your digital services tax. Period. Full stop’”, the west coast lawmaker said.
Kevin Brady, a Republican congressman from Texas echoed similar sentiments, asserting that the tax would hamper free-trade agreement negotiations.
“It’s not the way to start this discussion,” Brady said.
UK Prime Minister Johnson had this to say when asked about the proposed digital tax: “I think it’s deeply unfair that high street businesses are paying tax through the nose, whereas the internet giants, the Faangs – Facebook, Amazon, Netflix, and Google – are paying virtually nothing. We’ve got to find a way of taxing the internet giants on their income, because at the moment it is simply unfair”
The French government has also initiated a plan to tax US tech giants. Earlier last month, the tax proposal was adopted by France’s lower house of parliament – the National Assembly. The so-called GAFA tax – an acronym for Google, Apple, Facebook, and Amazon – would levy a 3 percent digital services tax on multinational tech companies’ sales generated in France. The tax targets 30 companies, most of which are from the US.
After catching word of the proposed tax, Trump lashed out at the President “Macron’s foolishness”, and hinted that countermeasures would be taken against French wine coming into the US.
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