The º£½ÇÊÓƵ government is assessing possible modifications to its digital services tax (DST) in an effort to prevent additional tariffs from the US, as disclosed by Rachel Reeves.
Since being introduced in 2020, the DST, which levies global tech giants such as Meta, Google, and Amazon, has generated approximately £800m annually, as reported by .
However, with President Donald Trump expected to declare new tariffs on the 2nd April, the º£½ÇÊÓƵ is said to be considering altering the tax in return for being exempted from the duties that Trump has warned he would impose on many of the º£½ÇÊÓƵ's trade allies.
Discussing the issue, Reeves stated: "We need to get the balance right. We don't want British exporters facing higher tariffs."
She further noted that the º£½ÇÊÓƵ would persist in ensuring that tech companies are taxed where they are operating while striving to uphold equitable trade ties with the US.
Nevertheless, this proposal has been met with harsh criticism.
Liberal Democrat leader Sir Ed Davey blasted the notion of adapting º£½ÇÊÓƵ tax policy to mollify Trump at his party's spring conference in Harrogate.
Davey cautioned: "Changing the º£½ÇÊÓƵ's tax policy to appease Donald Trump and Elon Musk is a dangerous path. Appeasement never works with bullies, and it doesn't work with Trump. Look at what he's already done with British steel tariffs".
His observations echo mounting apprehension that Labour's stance towards Trump might erode the º£½ÇÊÓƵ's capacity to maintain its fiscal sovereignty.
"Now Labour's even talking about scrapping Britain's tax on social media giants", Davey continued.
While Labour representatives, including Reeves, have not dismissed the possibility of altering the DST to secure advantageous trade conditions, the opposition contends that such compromises could result in long-term damage.
Business Secretary Jonathan Reynolds has spent this week in Washington addressing trade matters, while Tech Secretary Peter Kyle has also been stateside, championing the º£½ÇÊÓƵ as a centre for AI investment.
