Top US congressman warns of retaliation for UK tech tax targeting American companies like Facebook and Google

Texan congressman Kevin Brady called Chancellor Philip Hammond's plan a "blatant revenue grab" and said the US will "determine what actions are appropriate to ensure a level playing field".

The levy — targeting tech giants that pay almost no corporation tax in this country — was one of the most headline-grabbing measures in Monday's Budget.

But today Mr Brady, chairman of the House of Representatives Ways and Means Committee, said it unfairly targeted US firms.

He said: “The United Kingdom’s introduction of a new tax targeting cross-border digital services — which mirrors a similar proposal under consideration in the European Union — is troubling.

"Singling out a key global industry dominated by American companies for taxation that is inconsistent with international norms is a blatant revenue grab."

Mr Hammond hopes to raise £400m to pay for public services from 2020, with a two per cent levy on digital services revenue.

He told MPs in his Budget speech: "We are serious about this reform."

The Chancellor said it would hit companies that make more than £500million per year, not tech startups for which London is famous.

And in a quip at Nick Clegg, who has a new job doing PR for Facebook, he joked: "I'm already looking forward to my call from the former leader of the Liberal Democrats."

Google, Microsoft and ebay are thought to be among the estimated 30 companies that will be hit by the new tax.

Experts say Apple, Twitter and Uber are likely to be spared.

As revealed in his Tory conference speech earlier this month, Mr Hammond said the tax-dodging giants would be made to stump up more as part of his 21st-century blueprint to defeat Corbynism.

He wants to put the new system in place within two years, and will push ahead with it after losing patience with the US for not acting quickly enough.

Opposition MPs were quick to criticise it – saying it didn't go far enough.

Labour's Tom Watson stormed: "The tech giants do need to pay more in tax, but the measure announced today is pittance for these massive international companies.

And MP Liz Kendall said: "£400m sounds a lot but it’s pretty low when you look at profit these huge digital companies make."

Tax experts have also warned of the risk of a levy that appears to target only companies based in one country. Only US firms are likely to qualify, reports the BBC.

Heather Self of accountants Blick Rothenberg said if the Trump administration sees the tax as a tariff on successful American businesses it could prompt a complaint to the World Trade Organization.

She said: "Very few British firms are big enough – this is aimed at US giants and that brings a risk."

Angering Republicans could cause major headaches for minister seeking a post-Brexit trade deal with the US.

Donald Trump has shown he is not afraid of a scrap after launching a trade war with China over cheap imports of steel and aluminium.

In September he escalated the war with a further £150bn of tariffs on 6,000 household items including suitcases and washing machines.

He also threatened the EU faces a crippling trade war if it went ahead with plans to impose tariffs on Levi jeans and Jack Daniels whisky.



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