Campaigners tell Burnham not to trade away the UK's tech tax to please Trump

Civil society groups are urging Prime Minister Andy Burnham to maintain the UK's Digital Services Tax (DST) during his meeting with President Donald Trump in New York. The DST, introduced in 2020, imposes a 2% tax on certain revenues generated by UK users of major digital platforms such as search engines, social media, and online marketplaces. This tax aims to address the disparity in where digital businesses generate value and where their profits are taxed.

Groups including Tax Justice UK, 38 Degrees, Global Witness, and Cost of Living Action have written to Burnham and Chancellor John Healey, urging them to resist pressure to repeal the tax. Trump has threatened the UK with significant tariffs if it maintains the DST, claiming it unfairly creates trade barriers for US companies.

During their letter, the signatories call for the government to extend the DST to cover AI companies and other digital services, while also proposing measures to prevent multinational corporations from shifting profits through low-tax jurisdictions. Faiza Shaheen, executive director of Tax Justice UK, emphasized that the UK should not cut taxes for the richest corporations to please Trump. She emphasized that doing so would weaken the tax and potentially invite further demands from the US government.

The DST generated £800 million in 2024-25, with companies like Amazon, Google, Meta, eBay, and TikTok benefiting from its scope. As government borrowing increases, scrapping the DST would mean surrendering valuable revenue before Healey's first Budget. The campaigners argue that the government should collect more from digital giants, rather than less.