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US has told Britain it will not get a trade deal unless the new tech giants tax is ditched.
Officials ‘at multiple levels’ have relayed warning. Congressmen too. Big issue in talks.
Summary thread…telegraph.co.uk/politics/2019/…
US has told Britain it will not get a trade deal unless the new tech giants tax is ditched.
Officials ‘at multiple levels’ have relayed warning. Congressmen too. Big issue in talks.
Summary thread…telegraph.co.uk/politics/2019/…
I’ve been talking to a dozen+ figures tapped into early talks on a UK-US trade deal.
Was an attempt to work out situation on the ground beyond the warm Trump/Boris rhetoric.
There are sizable pitfalls…
Was an attempt to work out situation on the ground beyond the warm Trump/Boris rhetoric.
There are sizable pitfalls…
One big one playing out behind the scenes is over Britain’s ‘digital services tax’
That is a 2% tax of UK revenue which will hit Amazon, Google, Twitter, Facebook etc
That is a 2% tax of UK revenue which will hit Amazon, Google, Twitter, Facebook etc
It was announced by Hammond in Oct 2018 budget and due to become law in Autumn 2019 budget.
America is fiercely opposed, seeing it as a unilateral “tax grab” on American companies.
America is fiercely opposed, seeing it as a unilateral “tax grab” on American companies.
An indication of how against a digital services tax they are came last week.
France announced one. Trump threatened wine tariffs and called Macron ‘foolish' in response.
France announced one. Trump threatened wine tariffs and called Macron ‘foolish' in response.
Tax issues are not strictly part of trade deal talks. But US is willing to use its leverage.
US hardline is seen as a “strong concern”. One UK source said US is not bluffing.
US hardline is seen as a “strong concern”. One UK source said US is not bluffing.
Some of the strongest threats are coming from Congress which needs to approve the deal.
Silicon Valley’s lobbying is influential. It has led to some v tricky meetings….
Silicon Valley’s lobbying is influential. It has led to some v tricky meetings….
Liam Fox was given warning by Ron Wyden, the top Democrat on Senate Finance Committee, face-to-face in Washington last month.
“There should not be any negotiations on a trade deal as long as a digital services tax is being pursued,” Wyden said, according to 2 sources.
“There should not be any negotiations on a trade deal as long as a digital services tax is being pursued,” Wyden said, according to 2 sources.
Chuck Grassley, the top Republican on the committee, is understood to have said similar.
To boil that down - big figures in both parties are effectively telling Britain 'drop the tech tax or no trade deal'.
To boil that down - big figures in both parties are effectively telling Britain 'drop the tech tax or no trade deal'.
Telegraph also understands Liz Truss, the new Trade Sec, has serious concerns about tightening rules on tech firms and the impact it will have on trade deal talks…
She has doubts re the "online harm" white paper tightening rules on what appears on websites, per a well-placed source.
“She is a very purist free-trader who believes in light government intervention and that market forces will stimulate growth” the source said.
“She is a very purist free-trader who believes in light government intervention and that market forces will stimulate growth” the source said.
All of which means a big decision for Boris/Javid.
Do they delay the tech tax, smoothing path to a deal but being accused of folding to DC pressure?
Or stick with it, frustrating Trump administration but getting the £400m in revenue expected?
Watch this space….
Do they delay the tech tax, smoothing path to a deal but being accused of folding to DC pressure?
Or stick with it, frustrating Trump administration but getting the £400m in revenue expected?
Watch this space….
Here’s our inside piece unpacking the above and other potential pitfalls for a trade deal.
Tech tax + Dems holding House + timing issues + lack of clarity re UK-EU trading terms post-Brexit are all big challenges.
Tech tax + Dems holding House + timing issues + lack of clarity re UK-EU trading terms post-Brexit are all big challenges.
