LABOUR are considering cutting tax for Amazon and Meta in a bid to “appease” Donald Trump while taking money away from disabled people and public services.
The Chancellor has said there are “ongoing” discussions about cutting the digital services tax, as the UK Government seeks to get America to ditch its 25% tariffs on British steel.
Rachel Reeves said on Sunday that ministers had to “get the balance right” when asked whether the £1 billion a year tax on tech giants owned by some of the world’s richest men, including Jeff Bezos and Mark Zuckerberg, could be reduced.
Labour have drawn up a major package of cuts, including stripping £5bn from the social security budget and a similar sum from foreign aid as well as further cuts to the public sector more generally.
The UK Government is keen to get an exemption from the US tariff regime brought in by Donald Trump.
Labour backbenchers urged the UK Government not to cut tax for tech billionaires while implementing austerity.
Backbencher Rachel Maskell (above) told The Guardian: “With the Chancellor saying that she is still looking at the digital services tax, just days before the spring statement, then I would be concerned if relief was granted in what would be seen as a dash to let the US tech companies off the hook, while at the same time as making disabled people pay for the revenue loss, with their lifelines being cut.
“With the chancellor saying that she is still looking at the digital services tax, just days before the spring statement, then I would be concerned if relief was granted in what would be seen as a dash to let the US tech companies off the hook, while at the same time as making disabled people pay for the revenue loss, with their lifelines being cut.”
Clive Lewis, another Labour backbencher who has been critical of benefits cuts, added: “This was entirely predictable given how desperate the government is to appease the Trump administration and tech oligarchs around it.
“This is extractive politics at its worst and exactly the kind of deal the Maga [Make America Great Again movement] wants. Rather than move closer to Europe and stand together we’re allowing ourselves to be ripped off.”
Speaking at the party’s spring conference, LibDem leader Ed Davey (below) called Labour’s efforts to woo the Trump administration “appeasement”.
He said: “Now Labour’s even talking about scrapping Britain’s tax on social media giants. Well, appeasement never works with bullies, and it doesn’t work with Trump. And you can see that he’s already put his tariffs on British steel.”
Starmer and other European leaders have heeded Trump’s calls to spend more money on defence, with the UK set to boost military spending to 3% of gross domestic product (GDP) during the next parliament.
But the Americans have been disparaging of the Prime Minister’s efforts to cobble together a “coalition of the willing” to send troops to Ukraine to police a future peace deal.
Steve Witkoff, Trump’s special envoy to the Middle East who is also playing a role in peace talks with Russia, dismissed the “coalition of the willing” as a mere “posture and a pose”.
A Treasury spokesperson told The Guardian: “All taxes are kept under review and the 2025 review of the digital services tax has been planned since it was implemented in 2020 – so it would be wrong to imply any intention to repeal the tax from this.”
The Treasury was approached for further comment.
