Mnuchin warns United Kingdom over plans for a digital tax

Amazon Apple Facebook and Google are seen in a combination

Amazon Apple Facebook and Google are seen in a combination

France has already agreed to delay their plans to introduce its own digital services tax after Washington threatened to introduce a levy against the French cheese and champagne sectors.

Treasury Secretary Steven Mnuchin said on Thursday the USA government can not sustain federal deficits growing at current levels and will have to slow the rate of spending.

Secretary Mnuchin also said the administration thinks the digital tax is discriminatory in nature and warned the United Kingdom of retaliation if it imposes the tax on USA tech companies.

But Chancellor Sajid Javid said yesterday that it will be introduced in April this year as a temporary measure until an global agreement is in place on how to deal with big online companies like Google and Facebook.

French finance minister Bruno Le Maire suggested to the BBC that "the best solution" would be if everyone, including the United Kingdom, which will begin its tax in April, instead focussed on an global solution.

In an interview on the sidelines of the World Economic Forum on Tuesday, President Donald Trump said he would impose new tariffs on European auto imports if the European Union didn't agree to a new trade deal.

The World Trade Organization reform was also broached at Davos, as Trump told reporters, "We're going to do something that I think will be very dramatic" after a meeting with the institution's Director General Roberto Azevedo on Wednesday, a precursor to further talks in Washington.

The issue, which both sides indicated was resolved on Monday, has nonetheless been a lightning rod for a border transatlantic trade debate at the alpine conference this week.

Other countries are also taking action.

The UK is among numerous nations pushing for an agreement in the OECD to alter how corporate taxation operate on a worldwide level but these talks hit an impasse at December following the United States sought to water down them by making them optional.

President Donald Trump, who faces a tough reelection bid in nine months, raised the possibility of tax cuts earlier this week, saying a proposal could be rolled out within three months.

Approaching the European Union by threatening levies was the "next in the series" for Trump after smoothing out the U.S.

In late 2018, former United Kingdom finance minister Philip Hammond announced plans to introduce a two-percent tax on profitable tech companies that generate at least £500 million (590 million euros, $654 million) a year in global revenues.

The UK government plans to go ahead with a tax on digital services in April, according to Mr Javid.

French Finance Minister Bruno Le Maire said the agreement was a big win for France's "aggressive" approach.

For its part, the French government had warned that the European Union would retaliate if the US imposed additional tariffs.

Will a US-UK trade deal still be possible?

"We are working on an agreement with Steven Mnuchin, and I hope we can get a compromise in a few hours", Le Maire said Wednesday morning.

"Ultimately, it will be very easy because if we can't make a deal, we'll have to put 25 percent tariffs on their cars", Trump told Fox Business Network separately.

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