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Keir Starmer’s government is facing strong criticism over potential reductions to the UK’s £1bn-a-year digital services tax, which affects major US tech firms like Meta and Amazon. The proposed changes come amid controversial welfare cuts and public sector job losses, prompting accusations of “appeasing” Donald Trump.
Chancellor Rachel Reeves confirmed discussions about the tax are ongoing but emphasized the need for balance. The move is reportedly part of negotiations to remove Trump’s 25% tariffs on British steel. Critics, including Labour MPs and Liberal Democrat leader Ed Davey, argue that slashing taxes for US tech giants while reducing disability benefits and cutting Whitehall jobs is morally indefensible.
Labour MPs Clive Lewis and Rachael Maskell warned against favoring US corporations at the expense of the UK’s most vulnerable citizens. Meanwhile, technology committee chair Chi Onwurah raised concerns that delaying AI regulation to align with Trump’s agenda could pose security risks.
The Treasury maintains that a review of the digital services tax has been scheduled since its implementation in 2020. However, opposition parties claim that the UK risks making economic concessions without guarantees of reciprocal benefits from the US administration.
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