Campaigners tell Burnham not to trade away the UK's tech tax to please Trump Campaigners are urging Prime Minister Andy Burnham to defend the UK's Digital Services Tax (DST) when he meets Donald Trump in New York later today. Civil society organizations have written to Burnham and Chancellor John Healey, asking them to resist pressure to scrap the tax. Trump regards it as one of the European levies that …
Our PM will grovel and lick Trump's cankled boots to try to keep Trump from imposing 100% tariffs on everything imported from Blighty into the USA.
The toddler in chief will still be smarting over the reception at the UN so will want to humiliate another leader just to make him feel good before banning more news orgs from the White House.
I like your thinking...
In addition to applying punitive taxes to foreign-owned golf courses, may I humbly request you add to your new UK tax law to include a mandatory requirement for extremely large wind turbines to be built either side of the fairways of any foreign-owned golf course?
I understand that the current overseas owners of two such courses, both in Scotland, is an absolutely *huge* fan of the structures.
I suspect he'd be absolutely delighted, so that they could capture all the hot air and wind and generate something useful for the UK...
I wish every foreign leader was like Canada's PM. If they all stand together and tell Trump to fuck off then he has no power over any of them. Bullies win when they can divide the people they are bullying - if you ignore it when the bully is sticking some kid in a locker because you're glad it isn't you it makes it more likely no one is going to help when you're that kid tomorrow. Sad how many world leaders are "go along to get along" with Trump.
They should have all walked out of the UN collectively when he went to speak, and leave him talking to a dozen pariah states such as Iran and Russia. If nothing else they should have done it when he openly threatened committing war crimes against Iran.
So what? You don't think every nation inflates its reported GDP in any way that it can get away with?
You might not like the financial services sector (I don't), but they contribute between 8 and 11% of UK GDP, generate a trade surplus of £85bn, 1.1m jobs, and £35bn of direct taxation.
The UK does very well in fields other than financial services - education, science, research, pharma, civil justice, several areas of advanced manufacturing.
Replace DST with a VAT charge on the effective value of the "free" service they offer. Tech companies can either leave it to the authorities to decide the value, or offer a paid account that's free of ad and data revenues at a fixed annual fee and use this to determine the effective value of the free ad and data funded accounts for the purposes of calculating VAT.
But you want to extend it to VAT on unpaid services.
You do realise that'll end up covering everything down to Scouts mowing the lawn when it isn't even bob-a-job week.
Oh, wait, you think they'll be able to create a VAT category that manages to cover all these companies, without leaving massive holes for them to escape through, but which will also be well-constructed enough to avoid all other forms of unpaid service? Ha. Ha ha. Ha ha hahahahaha.
Didn't say unpaid service. Said "free" in air quotes. It's a service that's paid for by someone other than the consumer who gets it "free" in exchange for their data and/or for consuming ads.
Imagine you were mowing lawns for "free" day in day out but the owners of the lawns didn't pay you but instead watched ads while you mowed and the ad company paid you directly. It would be absurd to argue that VAT wasn't due on your services unlike your rival who charged for it the traditional way.
And they're already doing this in Italy.
Oh, wait, you think they'll be able to create a VAT category that manages to cover all these companies, without
A valid comment if unnecessarily snarky, but if the OP's solution won't work without unacceptable downsides, what's your solution to the problem of US companies industrialised tax avoidance?
To be fair, there was some inkling of a prospect, when "Trump" threatened to withdraw US troops from NATO countries, becuase he was labouring under the misapprehension that US troops in NATO countries help support the NATO countries and not the other way around.
As it happens if Trump did decide to do this, the result would be that the UK no longer hosts US troops, bombers, nukes, and the wives of servicemen who drive on the wrong side of the road and kill motorcyclists before fleeing the coutnry under the cover of diplomatic immunity, and the US would lose a whole swathe of its force projection across the globe, as well they should given that they don't tend to use it for the good of others, or really themselves either.
The tax was introduced to address what the government described as a mismatch between where digital businesses generate value and where their profits are taxed. It is separate from corporation tax rather than a replacement for it.
Incorrect. The tax was introduced because HMRC is too lazy to enforce existing taxes. Multinational corporations are free to pay whatever taxes they want, not what they actually should be paying.
The hope is that coming to those corporations with lazy tax man cap in hand will yield a little bit of cash, that inevitably will be spent on the adjacent corporations posting inflated bids for public sector contracts.
In other words this is all just nonsensical theatre for the pleb.
President Trump continues to repeat the falsehood that the US is treated "very badly" by other nations, when the simple truth is that it is the vast wealth of the US that enables them to represent less than 20% of the world's population but continue to consume ~ 80% of the world's resources [China are catching up, *fast*].
But there's another critical dimension here.
Last year, the US Senate refused to ratify Pillar One of the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing (BEPS), commonly known as the OECD Global Corporate Tax Treaty or the Global Tax Deal.
As a result of the US Senate pulling that particular trick, US multinationals continue to syphon all their profits out of the UK, undercutting UK-national competitors and simply not returning any of their vast profits to the UK economy. The US acts as a massive wealth black hole to the UK economy - with potentially billions in Corporation Tax simply not being received by the Exchequer.
So if the US continue to insist on playing the tariff card, perhaps it's time for other nations to call their bluff and insist that the trade relationships with the US all be pushed back to "WTO Rules", whilst simultaneously working hard to create alternate arrangements with the more sensible trading partners like Canada and Mexico. Perhaps after a couple of years of being completely isolated, of having e.g. Britain flex it's UN Veto as a Permanent Member of the Security Council, the US may decide that life is better when you have friends, rather than victims.
This is all smoke and mirrors.
The reason these "Frameworks" exist is precisely because corrupt government DON'T want to tax these corporations.
We have all the regulations necessary for them to pay taxes they should. The issue is the lazy bones tax man will not go to the corporation to do the full audit of their books.
It's became so blatant that HMRC officially don't know what is the resulting tax gap. Their figures are based on so called modelling - not actual real data, which is the fancy name for pulling the numbers out of arse.
The move of the sales of many goods and services to the internet has left bricks-and-mortar shops in a position where they often have higher overheads and can no longer effectively compete. In theory, anyone can start an online retailer and compete in "the marketplace", but in practice what happens is that economies of scale kick in and we end up with was online retailers and less consumer choice.
I reckon we should have an online sales tax that compensates for the overheads that physical establishments face; say 2.5% of sales, and then adjust it up or down when we see how it's going. On top of this, a "large retailer tax" for comapnies with a turnover over a certain level, and then we might see both a proliferation of new online retailers, with increased choice, and at least a slow-down to the closure of those well-established independent shops that you can go into and actually browse the things for sale.
This would be good for the economy, not only in increased tax revenue, but would also protect jobs and commercial rents, and thus the taxable income from those, and the associated advantages of footfall in shopping districts (low footfall leading to more vandalism and crime because nobody is watching). needless to say, the economy also needs money to be in peoples pockets so that they can spend it too. The mroe money moves about, the more becomes available to the exchequer. Conversely, the more money stagnates in the pockets of hoarding billionaires, the more the economy is starved, which serves nobody, not even the Smaugs.
I reckon we should have an online sales tax that compensates for the overheads that physical establishments face; say 2.5% of sales,
This is a fool's errand. Businesses that want to keep heads above water these days need to support online sales. This will only add compliance burden for small business and the 2.5% proposed will be squandered by corrupt government of the day.
Even if business only does online sales, they still need premises and these kind of taxes are always paid by customers anyway.
Commercial property market at least in the UK is dire. Business don't get to pick and choose, but rather leases what's available.
Even if business only does online sales, they still need premises and these kind of taxes are always paid by customers anyway.
Whilst this is true, warehousing is much cheaper and more space-efficient than a shop. A shop has many additional costs, not just limited to rent, but staff for stock replenishment, sales, and security, additional cleaning costs, and much less space efficiency, because customers come onto the premises. Over a certain size, or for shops that incorporate cafes and restaurants, toilet faciliteis (and cleaning) are required as well. high-street commercial rents are also much higher than those for a warehouse on an industrial estate. For all these reasonsa, and probably others on top, online-only or predominantly-online businesses havea clear advantage.
Businesses that want to keep heads above water these days need to support online sales.
Whilst this is also no doubt true, there are plenty of goods that are just better bought in person; heavy or bulky goods, perishable items, clothes or shoes you need to try on. Some shops aren't going to dsiappear any time soon; I can't foresee a huge boom in online greengrocers, especially when the state of courier companies in the UK seems to be a rapid race to the bottom. Many businesses provide online sales not because they find it more convenient or profitable, but because they need to do so to compete with the likes of Amazon.
Of course, like most taxes, a floor for when the tax applies is sensible; a 2.5% tax on all online sales over £1M (or some other arbitrary fine-tuning constant) would easily be applied, in the same way you don't pay income tax on earnings below the tax threshold, and the existing tax beign discussed only applies on turnover over a specific threshold. Even Liz Truss's economists could work this one out.
If the main logic for this being "unworkable" is that it might apply to small businesses (it can easily be made not to), or that "governments are corrupt" then I can only assume that you are an anarchist who believes in 0% taxation and no public services, policing, emergency services, or military.
I would add that, of course this sort of tax ends up being paid by the consumer. The idea is that the consumer has the choice between buying from a shop that hasn't gone out of business, or from an online retailer, for roughly the same amount of money, without one or the other having an unfair advantage. The alternative is that all the physical shops go out of business, the online behemoths drive all their competition out of business through economies of scale, and you have no choice but to buy from Amazon, who can (and will) put prices up to whatever level they feel like, because they have a fiduciary duty to their shareholders to do so. That's capitalism, baby! (and also why capitalism needs regulation to avoid becoming autocracy)
The "warehouses are cheap" idea belongs to about 2010. Industrial vacancy around London and the M25 is close to nothing, logistics rents have climbed for years, and every developer wants to put a shed on every field near a motorway junction. Meanwhile half the high street is charity shops and vape shops paying rents that landlords accept because the alternative is an empty unit. In plenty of towns, the shop is now the cheaper square foot.
The rates system has also already done your levelling for you. The 2023 revaluation pushed industrial rateable values up and retail values down. From April 2026, smaller shops get a permanently lower multiplier, and big distribution centres pay a higher one. So the online seller pays more rates on the warehouse, and you now propose to charge them again on turnover for the privilege of having a warehouse - that your retail store also needs.
Your list of shop costs is also strangely one-sided. A shop has staff for replenishment and sales. A warehouse has pickers, packers and dispatch staff, and then pays a courier to finish the job. In a shop, the customer does the picking and carries the goods home for free. That is the most efficient unpaid workforce in British retail, and you left it off the balance sheet.
You also forgot returns. Online sellers take back a large share of what they sell, pay the postage both ways, inspect it, repack it, and bin a good part of it. They pay for every customer through advertising or marketplace fees, because nobody walks past a website by accident.
Toilets and cleaning are a legal duty in every workplace, warehouses included. There is no general legal duty on a shop to give customers a toilet, as anyone who has asked in a high street chain will confirm.
Every example you give is already sold online in volume. Sofas, beds and white goods come by van whether you buy them in a shop or on a website, because nobody carries a fridge home on the bus. Tesco, Sainsbury's and Ocado deliver perishables to millions of homes every week, and Riverford and Abel & Cole have run the online greengrocer you cannot foresee for decades. Clothing and shoes are among the largest online categories in the UK, which is exactly why free returns exist.
A £1 million turnover threshold protects almost nobody. An online retailer turning over £1 million on a typical margin keeps perhaps £30,000 to £50,000 in profit. Your 2.5% takes £25,000 of that. Income tax thresholds work because income tax falls on income. T
Thresholds also cause their own damage. The VAT threshold already makes small businesses cap their growth at £90,000 to avoid it, and every threshold invites people to split one business into several. The government then writes anti-avoidance rules, and the "easy" tax becomes a compliance industry. You also still have to define an online sale. Click and collect? A phone order? A shop's own website? Tesco home delivery? The Treasury consulted on exactly this in 2022 and dropped it in 2023, partly because it could not answer those questions fairly. Apparently it could not work out what you worked out in one post.
When the UK introduced the 2% Digital Services Tax in 2020, Amazon raised its fees to UK marketplace sellers by 2%. The small businesses paid it. Your tax would go the same way. Amazon's scale advantage is also far larger than 2.5%, so a levy that size will not change its position at all. If the problem is market dominance, the tool is competition law, which the CMA now has stronger powers to use. A sales tax only makes everyone else poorer while the behemoth sends the bill down the supply chain.
Haha and where did that 2% go? We have yet another budget black hole and zero growth.
Amazon has no fiduciary duty to raise prices to whatever level it likes. Directors must promote the success of the company. Amazon has spent twenty-five years doing that with low prices and fat fees charged to the sellers who depend on it. Which is precisely the mechanism that would carry your tax straight to them.
Your list of shop costs is also strangely one-sided. A shop has staff for replenishment and sales. A warehouse has pickers, packers and dispatch staff, and then pays a courier to finish the job. In a shop, the customer does the picking and carries the goods home for free. That is the most efficient unpaid workforce in British retail, and you left it off the balance sheet.
Goods don't magically transport themselves from a warehouse into a shopper's basket. A physical shop still has pretty much the same logistics costs for warehousing as an e-tailer. Large shoips liek supermarkets do the warehousing and logistics themselves, others pay someone else to do it for them, which goes into their supplier costs. A greengrocer still has to go to a fruit market and pick and load goods into a van, then come and put them onto shelves, a corner shop still has to take regular deliveries and stack them, the van that brings them and the warehouse it comes from add costs; I omitted these costs, because they are similar between the two types of business, even if not paid diretly.
The Treasury consulted on exactly this in 2022 and dropped it in 2023, partly because it could not answer those questions fairly.
Was that under Johnson, Truss, or Sunak? I think this probably points to a dysfunctional treasury run by ministers who can't tie their own shoelaces.
Amazon has no fiduciary duty to raise prices to whatever level it likes. Directors must promote the success of the company. Amazon has spent twenty-five years doing that with low prices and fat fees charged to the sellers who depend on it.
Amazon has spent 25 years undercutting other retailers to reduce market variety, so that they can do exactly this. Prices are creeping up. In places where they have cornerd the market, or are near to doing so, prices have risen sharply, to the extent that it is often cheapest to go and find the prodcut you want on Amazon's site and then find the original retailer and buy it from them. It used to be the case that Amazon were usually cheaper, but they have taken advantage of their position, and their ubiquity to change this as much as they can get away with.
If you think de-facto monopolies can't and don't manipulate prices in order to maximise profit margins, then you just haven't been paying attention to how capitalism works.
This is the entire point.
If I need a widget, and I go into a widget shop and widgets cost £1, which makes the shop 5p profit after costs, I will buy a widget at £1.
If megaglobalhypercorp.com starts selling widgets at 95p, because they have eliminated the costs that the widget shop has, people are going to buy them there instead. The widget shop can't compete at 95p, and we lose the widget shop from the high street. The next time you need a widget in an emergency, or want to browse widgets and pick them up and have a look, you're bang out of luck.
megaglobalhypercorp.com can then raise their widget price to £1.50, or whatever price the market will bear, and since there are no widget shops any more, you have to pay this price if you want a widget. Businesses that depend on widgets see their costs go up by 50%, driving inflation.
If, however, you say that megaglobalhypercorp.com pays a 5% tax on every widget, the price of their widgets goes up to 99.75p. People then still have the choice of the convenience of buying a widget online and having it delivered to them, or of going into a shop and picking one out and taking it home themselves.
The customer is never paying more money for their widgets, and even though that tax is being passed onto them, it is only bringing the price up to what they would be paying anyway, and has the effect of levelling the playing field such that physical shops can continue to compete. Those shops continue to pay employees, whose taxes go into the treasury, the money stays in the local economy and doesn't end up on the balance sheet of a global company headquartered in a tax haven and run by people with very large yachts.
Although AFAIK all this does is put a lower sales tax on online software licenses for SAAS sales than if you delivered the software on CDROM - which is better than nothing
It still doesn't tax Netflix, Spotify, iTunes or the Apple appStore in the way that a bricks+mortar sale would be.
Still, given the amount of corporate legal fight being thrown against it - it must be doing some good.
Remind me again which government it was that put income tax up to its highest level in living memory, and squandered a load of public money on uncontested dodgy contracts to their mates during a pandemic, whilst simultaneously raising both the national debt and budget deficit to the highest level it has ever been, thus leaving a whopping hole in the public finances that can't just be filled with wishful thinking. Still, Michelle Mone got a nice yacht and an ermine robe out of it, yeah?
Let me guess? You're one of "those" who likes to claim that Labour governments "bankrupt" the country whilst the evidence, which is a matter of public record that anyone can look up, actually points to the opposite.
Yeah, except there's a certain type of person who lieks to claim that conservatives are the party of low taxes, and labour are the party of high taxes. For most people, the exact opposite is typically true, and this is why the economy typically tanks under right-wing governments and recovers under centre-left ones.
