U.S. Rep. Darin LaHood (R-IL) urged the Trump administration to address the discriminatory 3 percent to 5 percent tax on gross revenue proposed by several European countries on digital services provided by American technology firms.
“Proposals by the French and other countries designed to explicitly target U.S. companies through a digital services tax is wholly unacceptable and the U.S. should be prepared to use any necessary tools to combat these actions,” Rep. LaHood said last week. “We cannot sit on the sidelines as countries attempt to fund their governments by seizing the revenue of American businesses.”
Rep. LaHood led 15 other Republican colleagues, all members of the U.S. House Ways and Means Committee, in asking President Donald Trump to resolve the matter. Among the members joining Rep. LaHood in signing the April 3 letter to the president were U.S. Reps. Vern Buchanan (R-FL), Tom Reed (R-NY), Mike Kelly (R-PA), Tom Rice (R-SC), Jackie Walorski (R-IN), Brad Wenstrup (R-OH) and Ron Estes (R-KS).
The lawmakers noted their “serious” concerns about the proposed digital services tax because it “targets U.S. companies, U.S. exports, and the U.S. tax base.”
The French government on March 6 proposed a unilateral digital services tax on U.S. companies for digital advertising, online platforms and the transfer of data, according to Rep. LaHood. The proposal also would set special revenue thresholds “that together ensure that U.S. companies are the main taxpayers,” according to the members’ letter.
“To make matters worse, France proposes to make this tax retroactive to January 1 and to apply it to revenues, not profits,” wrote Rep. LaHood and his colleagues, referring to the tax of up to 5 percent on a company’s gross revenue. “Other trading partners in Europe and elsewhere are considering similar discriminatory taxes, compounding the problem.”
These efforts, said Rep. LaHood, “contradict longstanding global consensus-based practices and would result in double taxation on American businesses.”
He urged President Trump and his administration “to forcefully engage on this issue, making it known that these types of practices won’t stand.”
France’s digital services tax proposal follows the European Union’s decision last year to reject new revenue taxes that also narrowly targeted U.S. digital companies, according to Rep. LaHood. Yet Germany, the United Kingdom, Italy, Spain, and Austria have proposed similar digital service taxes, he said.
“You have outlined a vision of negotiating zero tariffs, zero non-tariff barriers and zero subsidies in transatlantic trade, and we strongly agree with this objective,” wrote the lawmakers. “Yet as leading trade experts have noted, such a digital tax is discriminatory and operates like a ‘de facto’ tariff on U.S. exports and represents a move in exactly the wrong direction.”
The representatives requested that the Trump administration “engage forcefully” on such issues and address them “as a trade barrier.”