UK Chancellor commits GBP 200 million to rural fibre broadband
- Author: Eleanor Harrison Nov 01, 2018,
Nov 01, 2018, 2:30
Revealing the tax in Parliament, Hammond said that it will be "carefully created to ensure it is established tech giants - rather than our tech start-ups - that shoulder the burden of this new tax".
A tech tax is already being considered by the European Commission, which in March this year unveiled its proposals in an effort to get leading (and mostly American) technology companies to pay more tax.
"The UK has been leading attempts to deliver global corporate tax reform for the digital age", said Hammond in the House of Commons while unveiling the budget.
"And it's clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the United Kingdom without paying tax here in respect of that business".
The Chancellor also insisted that his Budget tax cuts and spending hikes were not meant to woo voters ahead of an early poll. The chancellor added that the UK Government welcomes discussion on a possible replacement if there proved to be a consensus objecting the implementation of the digital services tax. He said that while a global agreement on how digital taxes shall be implemented would be an ideal solution to the issue, talks at a global level have been slow.
"Speaking on behalf of BIFA's members, which facilitate much of the movement of the UK's visible exports and imports, we believe that any new tariffs and delays that could result from a no-deal Brexit would make today's announcements unsustainable", said Keen.
"But the worry for the tech giants, and their shareholders, is that this is the pebble that starts an avalanche of taxes from global governments", Hargreaves Lansdown analyst Laith Khalaf said. This will be a narrowly-targeted tax on the UK-generated revenues of specific digital platform business models.
And the tax cut will be backdated to anyone who has bought a shared ownership home since last year's budget.
And it warned that tax rises are "all but inevitable" in the longer run to pay for the pressure on the NHS of Britain's ageing population.
As such, the tax includes a "safe harbor provision" that exempts loss-makers and reduces the rate of tax on businesses with "very low profit margins".
"Income tax is devolved and raising the higher rate threshold should not be a priority for the Scottish government, we need a distinctive tax that meets the needs of the people of Scotland". It is expected to raise about £400 million ($512 million) a year, Hammond estimated.