United Kingdom will tax tech giants

Andrew Cummings
November 1, 2018

Grappling with giants: There's been growing discussion of the viability (and indeed desirability) of a "tech tax" in recent months as a way to grapple with the sprawling, global structures of big USA tech firms like Google, Facebook, and Amazon.

Scotland's Finance Secretary has pledged to take a "more progressive approach" to income tax than Philip Hammond when he delivers Holyrood's budget.

However for the tech industry one of the most notable developments in this year's budget has been the "digital tax", and comes after years of complaints that American tech giants pay too little tax in certain European countries.

Chancellor Philip Hammond talked up the fact that point when people start paying the 40p tax rate would increase next year, so earnings up to £50,000 would be at the lower rate. And the move could also provoke a response from the USA government, given that it would exclusively target U.S. companies. "We can not simply talk forever", he said.


But Dame Margaret Hodge, a former chairwoman of the Commons Public Accounts Committee who repeatedly challenged tech giants over their taxes, said the £400 million tax was "simply gesture politics".

He said: "The Tories have once again chosen tax cuts for the richest in society, we will choose a fair, more progressive path and I will set out the details in the Scottish Budget on December 12".

The tax is only likely to affect 30 large companies.

In his annual budget speech on Monday, finance minister Philip Hammond said that it is not sustainable or fair that digital businesses are able to generate substantial value in the United Kingdom without paying their taxes here in respect to that business.


Hammond believes this digital tax will raise £1.5bn over four years. While the details of the new tax will be out after the government consults experts in the field the tax will be created to ensure it is established tech giants - rather than local tech start-ups shoulder the burden of this new tax.

Australia has wrestled with the tax avoidance practised by big technology companies like Microsoft, Apple, Google, Facebook and Amazon for some time. The plan covers many, but not all, of the core revenue streams through which the world's tech giants make their living.

Asked if Labour would reverse the Government's planned tax cuts, Mr McDonnell told Today: "We will support the tax cuts at the moment on the basis that it will inject some demand into the economy".

She would also like to see measures introduced to minimise the impact of the HMRC's planned rollout of Making Tax Digital, a major change to the way tax is collected, which will place disproportionate additional compliance and administration burdens on smaller businesses.


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