Boris Johnson risks Trump clash in London as he pushes on with plan to tax US tech giants

Prime minister indicated that he ‘deplores’ US retaliatory tariffs on French cheese and champagne

Andrew Woodcock
Political Editor
Tuesday 03 December 2019 23:30
Trump on NHS: 'We want nothing to do with it'

Boris Johnson has risked clashing with Donald Trump during the president’s visit to London by insisting he will press ahead with a new tax on US tech giants.

The prime minister suggested he “deplores” Washington’s retaliatory action against France for imposing a similar levy.

Mr Trump has threatened to slap import tariffs of up to 100 per cent – worth almost £2bn annually – on French goods including cheese, champagne and handbags after the introduction of a digital services tax which the US says will penalise firms such as Google, Amazon and Facebook.

From April next year, the UK is due to levy its own 2 per cent digital services tax on the revenues of search engines, social media platforms and online marketplaces that derive value from British users.

Asked if he backed Trump’s threat, Mr Johnson said: “Obviously I deplore [it], I don’t think that trade wars are a good thing.

“I do think we need to look at the operations of the big digital companies and the huge revenues they make in the UK and the amount of tax they pay.

“We need to sort that out. They need to make a fairer contribution.”

The introduction of the new levy risks sparking a trans-Atlantic row at the very moment at which Mr Johnson is relying on a swift and ambitious trade deal with the US to offset the likely decline in commercial links with Britain’s EU trading partners after Brexit.

The prime minister has already limited the scope of a potential US trade deal by ruling out the involvement of NHS services.

The new tax was announced in the 2018 budget by then chancellor Philip Hammond as a way of levelling the playing field between global tech giants who exploit the international system to minimise their tax liabilities and bricks-and-mortar businesses that are tied to local tax rates.

Mr Hammond said then: “It is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax here.”

Following talks with French president Emmanuel Macron in London on Tuesday, Mr Trump warned that taxes on French imports could be “substantial”.

Referring to the tech corporations to be caught by the new tax, Trump said: “They’re American companies. We want to tax American companies. That’s important. We want to tax them. Not somebody else to tax them.

“And as the president knows, we taxed wine and have other taxes scheduled. We would rather not do that. It will either work out or we’ll work out some mutually beneficial tax. And the tax will be substantial and I’m not sure it will come to that but it might.”

Speaking during an election campaign visit to Salisbury, Mr Johnson stressed that he wanted to remain on good terms with Mr Trump, who said on Tuesday that the PM “is very capable and I think he’ll do a good job”.

“It’s very important for the prime minister of the United Kingdom to have good relationships with the President of the United States,” said Mr Johnson.

“That’s just a geopolitical, geo-strategic fact, just as I think it’s very important for us to have the Elysee (French president’s office), the Kanzleramt (German chancellor’s office) and everywhere else.

“The UK’s role in Nato is to be the glue. We’re the second biggest player. We’re the country that historically has helped to bridge the Atlantic together and to bring Europe and America together, and that’s what we’re going to continue to do.

Mr Trump’s visit to London for the Nato leaders’ meeting has been dogged by questions about Labour allegations that access to NHS markets for US corporate giants is on the table in talks over transatlantic trade relations after Brexit.

Corbyn holds up a government dossier and alleges the NHS is up for grabs

Jeremy Corbyn last week released a leaked 500-page document which showed that the US was starting from a position of “total market access” as its baseline for trade talks. The papers recorded discussion of American demands for the extension of drug patents, which would allow pharmaceutical companies to charge the NHS more money.

Asked if the NHS should be on the table – as he suggested during a previous visit in June – the president said: “No, not at all, I have nothing to do with it. Never even thought about it, honestly.”

Mr Trump added: “I don’t even know where that rumour started. We have absolutely nothing to do with it and we wouldn’t want to if you handed it to us on a silver platter, we want nothing to do with it.”

Responding to the president’s comments, Mr Johnson said: “I want to stress that under no circumstances whatever will any part of the NHS be for sale.

“This is periodically, metronomically produced in a completely fraudulent way by the Labour Party in order to distract from the vacuity of their position on Brexit and their unwillingness to get Brexit done.”

He added: “From our point of view it was never remotely credible and it was never on the table.”

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