UK risks US tariffs on car exports over tax on tech giants

Web Editor | ConsumerConnect

Sajid Javid, European Union (EU) Chancellor, has insisted that the United Kingdom (UK) will go ahead with plans for a tax on big tech companies this spring despite a threat from the US to slap “arbitrary “tariffs on UK car exports, The Guardian UK reports.

Steven Mnuchin, US Treasury Secretary, at Davos 2020 said the government’s proposed digital services tax discriminated against the US multinationals, and warned there would be retaliation –probably a tax on UK car exports to the US – if the 2% levy were imposed in April.

The report says almost one in five vehicles manufactured in the UK are exported to the US, worth £8.4billion.

The country is said to be “a hugely important market to manufacturers, including Jaguar Land Rover and Aston Martin.”

The two finance chiefs Thursday January 23, spoke on a panel at the Davos meeting of political and business leaders.

“We plan to go ahead with our digital services tax in April. It is a proportionate tax, and a tax that is deliberately designed as a temporary tax,” Javid said.

Mnuchin, nonetheless, warned: “If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies.”

He added: “We’re going to have some private conversations about that, and I’m sure the President (Donald Trump) and Boris [Johnson] will be speaking on it as well.

“This is an important issue that we’ll deal with.”

The spat between the US and UK over the tech tax comes at a sensitive time in transatlantic relations as Johnson seeks a trade deal with America – which is the UK’s largest single-nation trading partner – to show he can make a success of Brexit.

Recall that Donald Trump, at a separate press conference in Davos, heaped praise on Johnson, and insisted the latter’s approach would result in a successful UK-EU trade deal after Brexit.

But the US has expressed its displeasure over the government’s digital tax plans which it views as a targeted attack on US tech giants such as Google, Amazon, Facebook and Apple.

Downing Street (UK) later said: “Imposing additional (car) tariffs would harm consumers and businesses on both sides of the Atlantic.

“We feel (the digital tax) is a proportionate step to take in the absence of a global solution.

“We made our own decisions in relation to taxation and will continue to do so.”

Javid, while defending the tech tax, reportedly raised eyebrows, as he told the panel that a deal with the EU was “of course, the first priority” over one with the US.

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