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Of course the US is retaliating against the UK’s misconceived Digital Services Tax
By David Jinks, ParcelHero
President Joe Biden’s US Government has slammed the UK’s go-it- alone Digital Services Tax (DST) as ‘unreasonable, discriminatory and burdensome’.
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t is planning to slap $325m (£235.8m) of taxes on key British exports to the US
in response to Britain’s new online tax. This introduced a new 2 per cent duty on services from the likes of US giants Google and Amazon, which was swiftly passed on to Britain’s online shoppers.
Many of Britain’s best-known brands will suffer new taxes of up to 25 per cent on their US sales if Washington follows through on its threat. Clothing, furniture, shoes and even specialist British products such as saddles will be hit by the new tariffs if they are introduced. Big names such as Burberry will be caught up in the tit-for-tat measures.
The DST was introduced last April in a desperate attempt to make up for lost income from business rates and to supposedly level the playing field between High Street and online stores. It was originally the brainchild of former Chancellor Philip Hammond. He decided Britain couldn’t wait for planned international action against multinational eCommerce giants and that the UK would go it alone with a new online tax. He
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argued the DST could bring in £500 million a year but, as shoppers moved online during lockdown, its timing proved unfortunate.
As we warned at the time, the international tech giants simply passed the cost to companies using their services, who then passed it on to their customers. Amazon increased seller fees on its platform in response to the 2 per cent tax increase, followed by Google, which now applies the full cost of the tax to all ads on UK Google and YouTube as an additional fee to advertisers. Needless to say, those advertisers then pass the cost of services such as ‘pay per click’ to their customers, through an increase in prices.
The US Government’s retaliatory strike was planned when Donald Trump was still in office, but President Biden has not stopped its rollout. The Office of the United States Trade Representative (USTR) will hold a committee hearing on 4 May to decide whether the new tax plans will be pushed through. If they are, then many of Britain’s best-loved brands will pay a heavy price for the misguided
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