Published: Thu, November 01, 2018
Money | By Wilma Wheeler

UK’s May denies good-news budget signals an early election

UK’s May denies good-news budget signals an early election

The proposal would see US giant firms in the likes of Facebook, Google, and Amazon paying additional taxes in the United Kingdom aside from the taxes they are already paying in the countries where their main headquarters are operating.

The chancellor said that it will apply to profitable firms that generate global annual sales of at least £500m via "certain digital platform models" including online marketplaces, search engines, and social-media platforms.

However, Finance Secretary Derek Mackay said: "According to this Budget, the Scottish Government's resource block grant from the UK Government - the money we are able to invest in day to day public services - remains nearly £2billion lower next year compared with 2010-11". "When push comes to shove, it's not tax rises and it's not the NHS that Mr Hammond is willing to gamble on, it's the public finances".

Hammond said on Monday that if a global solution emerges, Britain would consider adopting this instead of its levy.

"We have often said we do not believe an all-out online sales tax would help the high street, but instead harm those retailers [that] have embraced the future and adopted a multi-channel high street and e-commerce approach".

"Many public services are going to feel squeezed for some time to come".

According to the finance minister, the tax will be created to ensure that established tech giants and not startups were shouldering the burden.

More pragmatically, a United Kingdom tax has been talked about for years already, so this is just the start of how this might develop.

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

"So we will now introduce a UK Digital Services Tax".

Asked whether this was the case on ITV's Good Morning Britain he said: "I hope not". The new tax regime will come into place in April 2020, though should the European Commission come up with its own approach, the whole scheme might be scrapped.

Coward added: "As with diverted profits tax, this is clearly designed with specific targets in mind, and the predicted revenue from the measure is more modest than might have been expected".

At the same time, companies like Amazon and Apple are some of the biggest in the world and have grown tremendously in recent years, as people rush to purchasing products from them online.

The new digital tax will ensure the Silicon Valley giants are unable to avoid paying their dues for business in Britain.

"At some point, we will need to pay more tax if we are to continue to increase spending on the NHS like this", Mr Johnson warned.

It says that the tax will raise £275 million in its first year.

It is possible for firms that are affected to pass on the tax hike to consumers, analysts have said in this ongoing debacle to tax digital companies.

But given the dominance of U.S. tech giants, President Donald Trump's administration may not appreciate the proposal at a time when Britain is trying to agree new trade deals.

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