Boris Johnson’s plans for a multibillion-pound tax on tech companies such as Google and Facebook may be dropped in the post-Brexit rush to secure a trade deal with the US, trade experts have suggested.
The prime minister said internet companies needed to make a “fairer contribution”, as he indicated on Tuesday he would push ahead with a digital sales tax, despite opposition within his cabinet and a US backlash against similar plans from the French government.
There is a growing political consensus outside the US that the profit-shifting model is unsustainable. Labour included a pledge to tax large tech firms in its manifesto, while last year the Conservative party under Theresa May said it would introduce a digital services tax.
However, doubts have emerged about the government’s ability to raise taxes on one of the US’s largest export industries at the same time as securing a wide-scale trade deal with the US.
David Henig, the director of the UK trade policy project at the European Centre for International Political Economy thinktank, said one option could be that Britain trades a digital sales tax in return for the removal of tariffs on British goods. In October, the US imposed tariffs of 25% on UK products such as whisky, biscuits and Savile Row suits after a World Trade Organization ruling against Airbus. Read more