Tech giants face new £400m tax
TECH giants will face a new tax under plans set out by Philip Hammond in his Budget – but it will raise just £400 million a year.
The Chancellor used his Budget to declare that “austerity is finally coming to an end” as he loosened the purse strings with a string of spending commitments.
The Chancellor said the Office for Budget Responsibility (OBR) expected “resilient” growth over the coming years.
In the final scheduled Budget before Brexit, Mr Hammond announced an extra £500 million for preparations.
And he hinted that an emergency Budget could take place in the Spring: “If the economic or fiscal outlook changes materially in-year I reserve the right to upgrade the Spring Statement to a full fiscal event”.
Mr Hammond’s announcement of a new tax on digital firms, due to come in from April 2020, came as he acknowledged the major challenges facing high streets as consumers switch to online shopping.
The Chancellor said a global approach was the best way to deal with multinational online firms, but the UK was prepared to go it alone with a new digital services tax .
The plan, swiftly dubbed the ‘Google tax,’ is aimed at firms generating at least £500 million a year in global revenues and will raise more than £400 million a year for the Exchequer.
“It is only right that these global giants, with profitable businesses in the UK, pay their fair share towards supporting our public services,” he said.
He added that the levy would not be a sales tax on goods ordered over the internet as “such a tax would fall on consumers of those goods – and that is not our intention”.
Mr Hammond said his Budget was aimed at helping “the strivers, the grafters and the carers” and would pave the way for a “brighter future”.
Promising 1.2% annual average growth in departmental spending, the Chancellor set out one-off bonuses for defence, schools and local authorities after positive forecasts for the public finances came from the OBR.
He promised an extra £1 billion to the Ministry of Defence and £160 million to fund counter-terrorism policing.
He also confirmed extra cash for mental health services and £650 million for English councils struggling to cope with rising care bills.
Schools in England will get £400 million, an average of £10,000 per primary school and £50,000 for secondary schools.
A £420 million fund will help local highway authorities repair potholes and carry out other maintenance tasks.
In a major shift, the Chancellor also promised to abolish the use of the private finance initiative funding.
Jeremy Corbyn labelled the Budget a “broken promise Budget”. He said: “What we’ve heard today are half measures and quick fixes while austerity grinds on.
“And far from people’s hard work and sacrifices having paid off, as the Chancellor claims, this Government has frittered it away in ideological tax cuts to the richest.”