UK election to fuel Australian push against Google, Facebook

Britain’s election is to set to add to pressure on Australia to act to rein in Google and Facebook.

Britain's Chancellor of the Exchequer Sajid Javid. Picture: AFP

The US tech giants face greater taxation, regardless of who wins the UK election this week, adding to pressure on the Morrison government to follow the competition regulator’s recommendations to rein in Google and Facebook.

The UK Chancellor of the Exchequer Sajid Javid dismissed concerns of a US backlash against UK plans to impose a digital services tax from April, following President Donald Trump’s threats to impose taxes on French wine if France’s 3 per cent revenue tax on Facebook and Google, scheduled to start in January, goes ahead.

“The French have their approach we have a different approach, but our view is should be looking to have as much fairness in the tax system as possible and make improvement where you can,” Mr Sajid told The Australian at Number 11 Downing Street this week.

“We have a great relationship with US, and we are right to always be looking for fairness in the tax system,” he added, batting away concerns the UK, whose proposed DST is 2 per cent of revenues, would face a similar reaction from President Trump.

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Meanwhile shadow chancellor John McDonnell, in his last speech in London on Tuesday ahead of the general election, said Labour would set up a “business commission” that would overhaul regulation of banks and the tech sector.

“We (want) a tax regime that enables multinationals to contribute to our economy on the basis of apportionment of their profits based on looking at their operations in this country,” Mr McDonnell said.

“I’m not sure if breaking them up or proper regulation is the answer but that is be the debate we’ll be having,” he added, dismissing the UK tech reforms as “a fairly minor attempt to increase tax”.

The comments followed reports the Australian government was losing interest in one of the ACCC’s key recommendations from the Digital Platforms Inquiry – to mandate tech platforms pay news producers a fee for showing their content – because it might be perceived as a tax.

Despite being handed the report in July, federal cabinet has not considered the final ­response, which is being managed by Treasurer Josh Frydenberg, Communications Minister Paul Fletcher and Attorney-General Christian Porter.

Mr McDonnell, considered the mastermind of Labour’s radical agenda to renationalise trains, energy and wager industries in the UK and hike taxes to provide free university and childcare, wouldn’t be drawn on implications on Bill Shorten’s election loss earlier this year.

“People need to develop their own individual policies and programs for the challenges within their own country,” he said, when asked whether social democratic parties needed to be bolder to succeed at the ballot box.

“We don’t take any leading role… but we’ve helped inspire debate in the US where radical policies have caught all the democrat candidates in way they wouldn’t have five to 10 years ago,” he added.