United Kingdom to Slap New Tax on Technology Giants

Jeannie Matthews
November 1, 2018

In his budget statement yesterday, Chancellor Phillip Hammond revealed a two percent "digital services tax" on large tech firms such as Amazon, Facebook and Google. 'Digital Platforms delivering search engines, social media, and online marketplaces have changed our lives, our society, and our economy, mostly for the better.

Workers whose earnings fall between the Scottish higher rate threshold and the threshold for this in the rest of the United Kingdom would be taxed at 41%, as well as having to pay 12% National Insurance Contributions (NICs), Spice said, noting the employee NICs fall to 2% above the United Kingdom higher rate threshold. But speaking later on BBC Radio 4's Today programme, Mr Hammond said: 'When you make a promise to the electorate and they elect you then you have an obligation to deliver on that promise.' The Institute for Fiscal Studies yesterday said the Conservatives had pulled nearly a million people into the higher tax bracket in the past eight years.

The announcement came as Hammond splashed out on health services in a spending plan signalling the easing of eight years of austerity with a modest uplift in public spending and few major tax increases.

He has clearly listened to the Federation of Small Businesses' requests across many areas of tax and public policy, putting him firmly on the side of Britain's small businesses.

Mr Hammond said the new system is "carefully created to ensure that it is established tech giants, rather than our tech start-ups, that shoulder the burden".

The tax is projected to yield £5 million in 2019/20, but will steadily increase to around £440 million in 2023/24.

Asked whether this was the case on ITV's Good Morning Britain he said: "I hope not".

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Google and Facebook have however changed the way they account for their activities in Britain.

France, which supports a new levy, put forward last month the idea that such a tax would have a "sunset clause", meaning the tax would end when a global solution is found.

The Government cannot assume that tech start-ups will continue to flourish so a no-deal could very well see calls for greater investment incentives and infrastructure improvements.

Mr Johnson said that the rise in income tax thresholds announced by Mr Hammond would benefit the wealthy more than those less well-off, with a typical higher rate taxpayer gaining £176 a year and a basic rate payer gaining just £24.

The Chancellor has given reassurances that it will be tech giants who will be affected by the tax.

The U.K.is set to become the first developed economy to impose a tax that specifically targets large technology companies.

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