United Kingdom

Liz Truss dismisses US fury over UK plan to impose a tax on tech giants

Liz Truss today dismissed US fury over UK plans to impose a tax on tech giants as the risk of a trade war with Washington increased. 

The International Trade Secretary said the government's plan to introduce a digital services tax was 'not a matter for the US' as she insisted 'we will make the decisions that are right for Britain'. 

Donald Trump is expected to personally heap pressure on Boris Johnson to drop the levy. 

But Chancellor Sajid Javid said yesterday that it will be introduced in April this year as a temporary measure until an international agreement is in place on how to deal with big online companies like Google and Facebook.

Liz Truss, pictured in Downing Street yesterday, has dismissed US concerns about the introduction of a tax on tech giants

US Treasury Secretary Steve Mnuchin yesterday warned that imposing the tax would likely result in tariffs on UK car imports being hiked up

The US reaction to the proposed digital services tax was raised in the House of Commons this morning by Labour MP Jonathan Reynolds. 

He said the row was an 'early test' of how the UK could fare during post-Brexit trade talks with the White House as he asked Ms Truss if Britain will now 'concede to American pressure'. 

But a bullish Ms Truss hit back and said: 'Let me be absolutely clear. UK tax policy is a matter for the UK chancellor.

'It’s not a matter for the US, it’s not a matter for the EU, it’s not a matter for anybody else, and we will make the decisions that are right for Britain, whether it is on our regulatory standards, whether it’s on our tax policy, or whether it is on anything else.'

Downing Street appeared to back Ms Truss as the PM's official spokesman said: 'The United Kingdom's tax policy is a matter for the United Kingdom.' 

Mr Mnuchin was clear yesterday that the US administration remains ardently against the tax. 

The US believes the levy is fundamentally unfair because most of the companies which it would apply to are based in North America. 

Appearing alongside Mr Javid on a panel at the World Economic Forum in Davos, Switzerland, Mr Mnuchin said: 'I'm sure the president and Boris will be speaking on it as well, as the president did with Macron.'

He argued a digital tax is 'discriminatory in nature' and the US is participating in the OECD process to find a solution as he raised the prospect of a trade war over the issue.  

'If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies,' he warned. 

The US and France have announced a truce over President Emmanuel Macron's plans to introduce a similar measure after Washington responded with a threat to slap punitive tariffs on products including French cheese and wine.

But Mr Javid said the tax - a two per cent levy on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users - will be introduced.

He said: 'We plan to go ahead with our digital services tax in April. 

'It's important - as we said at the time when we first introduced it to Parliament and legislated for it - it is a proportionate tax.

'It is a tax that is deliberately designed as a temporary tax, it will fall away once there is an international solution.'

The UK has been urged to hold back on pressing ahead with the levy by the Organisation for Economic Co-operation and Development (OECD), which called for time to allow the push for an international approach to succeed. 

The prospect of a trade war with the US is likely to spark major concerns in the UK's manufacturing sector. 

Mr Trump has previously not hesitated in taking action against countries he believes are treating the US unfairly on trade.