Boris Johnson risks US backlash with vow of tax hit on tech giants

Boris Johnson has risked a rift with Donald Trump by suggesting he will tax technology giants such as Google and Facebook.

Britain's Prime Minister Boris Johnson greets German Chancellor Angela Merkel during a reception at Buckingham Palace before the NATO summit. Picture: AP

Boris Johnson has risked a rift with Donald Trump by suggesting he will push ahead with a tax on technology giants such as Google and Facebook to ensure they make a “fairer contribution”.

The US President has threatened France with $US2.49bn ($3.5bn) of retaliatory tariffs on products including champagne and cheese after it introduced a “digital services tax”.

Mr Johnson on Wednesday (AEDT) signalled his Conservative Party still intended to introduce a similar tax in April by applying a 2 per cent levy on the revenues of tech companies in Britain. He has been warned by his ministers that the proposal could derail post-Brexit trade talks with the US.

“I do think we need to look at the operation of the big digital companies and the huge revenues they have in this country and the amount of tax that they pay. We need to sort that out. They need to make a fairer contribution.”

Many American tech giants pay little tax in Europe because they channel sales through ­Ireland, Luxembourg and other countries with favourable tax ­regimes. Such schemes are legal but have angered traditional bricks-and-mortar retailers who say that they are being unfairly undercut.

Britain’s digital sales tax would apply to companies with global revenues of more than £500m ($950m) and UK revenues of more than £25m. It is forecast to raise £440m a year by 2023-24.

Asked about the US threat of ­retaliatory tariffs against France, Mr Johnson said he ­“deplored” trade wars and that Britain would do everything it could to stop them. French President Emmanuel Macron has announced a 3 per cent digital service tax.

“I don’t think trade wars are a good thing,” Mr Johnson said. “When we take back control of our tariffs, which we will on January 31, I hope, I know, we will campaign for freer trade.”

There are already tensions over Mr Trump’s decision to charge 25 per cent tariffs on food and drink exports from the EU, including Scotch whisky. The tariffs, ­imposed in retaliation for EU subsidies to the aerospace company Airbus, could lead to the industry losing as much as 20 per cent of sales in the US over the next 12 months. Mr Johnson personally appealed to Mr Trump to drop the tariffs last month.

The fresh dispute came as Mr Trump made a series of interventions despite saying he wanted to stay out of next Thursday’s British election. He said he wanted “nothing to do” with the National Health Service even if it were handed to him on a “silver platter” after repeated accusations by ­Labour that it would be up for sale in a post-Brexit trade deal. Mr Johnson has said the claim is “completely fraudulent”.

Labour leader Jeremy Corbyn had threatened to confront Mr Trump at Buckingham Palace on Tuesday night but the two men did not come into contact.

The President also said he was a “fan of Brexit” as he hailed Mr Johnson as “very capable”, adding that he thinks he will do a “good job” if he wins the election. The Prime Minister had said he did not want his endorsement.

Earlier, Mr Trump defended his approach on tariffs and said French companies faced “very big taxes” on imports to the US.

“I’m not in love with those companies — Facebook, Google and all of them. But they are American companies,’’ he said. “It was totally out of the blue, Emmanuel had the idea to tax those companies. If anyone is going to take advantage of the American companies, it is going to be us, it is not going to be France. So we are taxing their wines and everything else, and we have a very, very big tax to put on.”

French Finance Minister Bruno Le Maire said the US threat to impose tariffs was “unacceptable” and not worthy of an ally.

The Times