Labour ditches its £3 billion tech giant tax in what Tories claim is the opposition's 'fifth flip-flop in a month'
- The policy has been shelved over fears it could trigger a trade war with the US
Labour has quietly ditched a £3billion tax raid on tech giants in what the Tories say is the Opposition's fifth flip-flop in a month.
Shadow Chancellor Rachel Reeves had previously pledged to hike the 'digital services tax' on the revenues of US firms such as Amazon and Facebook, to 10 per cent.
The cash raised from the levy – far higher than the current 2 per cent rate – was earmarked to reduce business rates for small businesses and high street shops under a future Labour government.
But it emerged yesterday that the policy has been shelved over fears it could trigger a trade war with the US, leading to UK exporters being hit with punitive tariffs.
A source told The Times: 'The Americans see these taxes as unfairly targeted at US firms.
Shadow Chancellor Rachel Reeves (pictured on June 24 2023) had previously pledged to hike the 'digital services tax' on the revenues of US firms such as Amazon and Facebook, to 10 per cent
'It would not have been a great start for Labour's relationship with the Biden administration.'
A spokesman for Labour confirmed the party had 'no plans to raise digital services tax'.
He added: 'Our position on the digital services tax referred to the years of 2022/23 and 2023/24 and was a temporary measure, entirely within the rules of the international agreement, that we would be doing in that time to cut business rates and help our struggling high streets.'
The Conservatives responded with an attack advert online depicting Ms Reeves and party leader Sir Keir Starmer together with a pair of flip-flops. It stated: 'Labour's fifth flip-flop this month.'
