With several countries having or considering implementing digital services taxes (DSTs), U.S. Reps. Ron Estes (R-KS) and Darin LaHood (R-IL) on June 4 proposed a bipartisan resolution to oppose such levies on the United States.
DSTs, which are levies imposed by governments on the gross revenues that large technology and multinational companies generate from providing digital services to users within their borders, unfairly target and discriminate against American companies and workers, according to the lawmakers.
“Free and fair trade relies on international cooperation, mutual respect, and legal certainty,” Rep. Estes said. “DSTs are designed to unfairly penalize American innovation, creating a hostile environment of double taxation and market distortion that harms not just our premier tech companies, but also the U.S. small businesses and consumers who rely on them.”
“This resolution sends a clear message: the United States will use every trade and tax tool at our disposal to protect our workers and businesses from discriminatory foreign overreach,” added Rep. Estes, who sponsored House Resolution (H.Res.) 1340.
Rep. LaHood, co-chair of the Digital Trade Caucus and one of five original cosponsors of H.Res. 1340, agreed, saying fair and effective digital trade rules directly correlate to the success of manufacturers, farmers, and small businesses.
“We must remain aggressive in using the necessary tools to combat unfair foreign digital trade policies that are in direct contradiction to our values and seek to undermine American businesses,” Rep. LaHood said.
H.Res. 1340 highlights that several countries — including France, Italy, Spain, Turkey, Austria, and the United Kingdom — have already implemented DSTs, while others, such as Poland and Belgium, are actively considering them.
These taxes deviate from established international income tax systems by targeting a company’s gross revenue rather than its net income, regardless of whether the business has a physical presence in that country, the lawmakers said.
“The U.S. should be rule makers, not rule takers, in the growing global digital economy,” said bill cosponsor U.S. Rep. Suzan DelBene (D-WA). “This resolution urges the U.S. to oppose digital service taxes that undermine the competitiveness of our digital sector and defend the high-quality jobs it supports.”