The government’s digital minister has admitted she was not consulted about the tax on US tech giants announced in Monday’s budget.
Margot James sparked cries of disbelief in the House of Commons on Thursday after she insisted she had had “no discussions with the Treasury on the matter”.
Her statement came after her Labour counterpart Liam Byrne accused her of “conspiring with the Treasury” over the controversial digital services tax, which he said would “give a free pass to some of the wealthiest firms on Earth”.
Reacting to heckles from the opposition benches, James - who was appointed to her role in January - said: “No, I have not. He’s alleged that I’ve had discussions, which I haven’t.”
Under Chancellor Philip Hammond’s proposals for the new tax, large digital companies would pay 2% tax on the sales they make in the UK, with the Treasury expecting the levy to generate £275 million in 2019/20.
Under current regulations, big tech firms pay taxes on UK profits, which amounts to much less.
But critics have said the move will still not generate enough tax from companies like Amazon, Google and Facebook, with Byrne alleging that the levy would be outweighed by the government’s decision to cut corporation tax to 17%.
Speaking after the budget, chief executive of the campaign group Tax Justice Network Alex Cobham dubbed the scale of the levy “trivial”, saying it was “much less than what could have been achieved by simply reversing one percentage point of the entirely needless corporate income tax cuts of the last few years”.
James’ comments come on the same day that sports minister Tracey Crouch dramatically quit the Government in protest at delays to a planned crackdown on addictive gambling machines.
The Chatham and Aylesford MP resigned from her post after Theresa May refused to reverse a decision to postpone the reduction in maximum stakes for fixed odds betting terminals (FOBTs) from £100 to £2.