The idea of taxing online services goes back about 15 years, according to Ed Gresser, who worked at the office of the U.S. Trade Representative during the Clinton, Obama, Trump and Biden administrations.
Gresser said that Trump strongly opposed the tax in his first term and launched investigations into DSTs adopted by EU countries, Canada, Brazil and others. The Biden administration reversed course, he said, “basically saying a lot of regulatory policies in the EU were not meant to be discriminatory.” Meanwhile, countries in the OECD tried to negotiate a global agreement on digital taxes that could replace country-by-country policies, though that effort has stalled over disagreements.
In February, Trump directed the USTR to consider renewing investigations of countries that have the tax, naming the U.K., France, Italy, Canada, Spain and Turkey.
Bashing digital services taxes seems to be a rare point of D.C. bipartisan consensus. Rep. Adrian Smith (R-Neb.), chair of the House Ways and Means trade subcommittee, said in an email that he “would like to see the U.K. be a willing partner to reset global digital rules in a way which does not target American companies and restrict innovation.”
Senate Finance ranking member Ron Wyden (D-Ore.) said via email that he too opposed “discriminatory foreign taxes that unfairly target U.S. companies, including the U.K. DST.” However, he said he had “no confidence that Donald Trump’s chaotic, unfocused trade policy will deliver any meaningful wins to bring down trade barriers.”
Gresser said U.S. pressure on London to roll back its DST could be a signal to other nations.
“A lot of countries are experimenting with this,” he told POLITICO. “I think this is sort of a transitional period where countries are thinking about ‘if we’re going to have a sales and consumption tax, how do you integrate that into the digital world?’”
