Boris Johnson hits back at White House in digital tax row despite trade war threat
Boris Johnson has risked a trade war with America as he hit back in the row over the Government's plans to slap a new tax on the likes of Google and Facebook.
US Treasury Secretary Steve Mnuchin has warned that UK car manufacturers could face retaliatory tarrifs if the Government presses ahead with its plans for a digital sales tax.
Chancellor Sajid Javid has already insisted that the "proportionate" tax will kick in from April as planned.
In a dramatic ramping up of the dispute, a spokesman insisted the Government will not back down in the face of the US threats.
He said: "The UK’s tax policy is a matter for the United Kingdom and it’s government."
The spokesman added: "We are fully engaged in international discussions to address the challenges digitalisation poses for tax.
"Our strong reference is for an appropriate global solution. It has taken too long to address this issue at international level and so we will continue to introduce our digital services tax in April in the absence of a global solution."
Under the proposed tax, tech firms would be hit with a 2% levy on revenues made from UK consumers.
France has already agreed to delay their plans to introduce its own digital services tax after Washington threatened to introduce a levy against the French cheese and champagne sectors.
Meanwhile, International Trade Secretary Liz Truss also batted away suggestions from MPs that the Government was preparing to bow to the US threats in a bid to boost the chances of a post-Brexit trade deal.
Instead, she said it was "absolutely clear" that decisions around the tax were a "matter for the UK Chancellor".
She added: "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."
At the World Economic Forum in Davos on Wednesday, Mr Javid said: "We plan to go ahead with our digital services tax in April. It is important, as we said at the time... when we first legislated for it, that it is a proportionate tax.
“It is a tax that is deliberately designed as a temporary tax so it will fall away when there is an international solution.”
But Mr Mnuchin hit back, saying: “I think we have been pretty clear that we think the digital tax is discriminatory in nature. There is an OECD process that we are participating in.
“International tax issues are very complicated, they take a long time to look at, and if people want to just arbitrarily put taxes on our digital industries we will consider putting arbitrary taxes on their car companies.”
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