Budget shows United Kingdom not serious about erasing budget deficit by mid-2020s

Philip Hammond discusses the Budget at No 11 Downing Street

Philip Hammond discusses the Budget at No 11 Downing Street

The tax, levied at two per cent of UK-derived revenues, was unveiled by Chancellor Philip Hammond during the Budget on Monday and is meant to raise around £400m from companies operating as search engines, social media platforms, and online marketplaces.

The 2pc tax, revealed in the latest United Kingdom budget, will target revenues earned in the United Kingdom by online players ranging from search engines to social networks.

The tax will be created to ensure established tech giants, rather than start-ups, shoulder the burden, Hammond told parliament.

However, Finance Secretary Derek Mackay said: "According to this Budget, the Scottish Government's resource block grant from the UK Government - the money we are able to invest in day to day public services - remains nearly £2billion lower next year compared with 2010-11".

The head of Britain's treasury has proposed a new tax targeting tech giants such as Google, Facebook and Amazon.com, in what he described as a necessary evolution of the corporate tax system in the digital age.

"We'd reverse some of the corporation tax cuts".

"The rules have simply not kept pace with changing business models", Philip Hammond, chancellor of the exchequer, said in a budget address to Parliament on Monday.

The levy, which is scheduled to go into effect in 2020, will apply to companies that record a profit and generate at least 500 million British pounds, or about $640 million, in global annual revenue.

Hammond said on Monday that if a global solution emerges, Britain would consider adopting this instead of its levy. "This is not an online sales tax on goods ordered over the internet", he said, saying that such a tax would end up getting passed down to users.

The chancellor had better than predicted tax receipts and was buoyed by an improved forecast for employment. And we'll only get £400m from them. The tax targets companies with worldwide annual revenues of €750m or more and that have European Union taxable revenues of at least €50m.

Mr Johnson said that the rise in income tax thresholds announced by Mr Hammond would benefit the wealthy more than those less well-off and, despite a cash injection into the controversial Universal Credit benefit scheme, there will still be "millions of losers" due to it.

The U.K. plans to tax ads on social media, display advertising next to search results and commissions on transactions made via online marketplaces between U.K. users.

The Government cannot assume that tech start-ups will continue to flourish so a no-deal could very well see calls for greater investment incentives and infrastructure improvements.

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