Budget giveaways will benefit rich families 14 times more than the poor

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In his Budget statement this afternoon, Chancellor Phillip Hammond revealed a two percent "digital services tax" on large tech firms such as Amazon, Facebook and Google.

"The Digital Services Tax will only be paid by companies which are profitable and which generate at least £500m a year in global revenues in the business lines in scope", he continued.

The budget, which was delivered by chancellor Philip Hammond on 29 October, details that the tax only applies to businesses with annual revenues of £500 million or more, and will come into effect in April 2020.

The higher rate was already much lower in Scotland, at £43,430, and if there are no changes in the upcoming Scottish budget it would mean that someone earning £60,000 would pay £1,660 more in income tax if they live north of the border. He stressed that a global agreement on digital tax was the best solution, but expressed concern at the slow progress of talks. He also said the tax would not impact technology start-up companies.

But Dame Margaret Hodge, a former chairwoman of the Commons Public Accounts Committee who repeatedly challenged tech giants over their taxes, said the £400 million tax was "simply gesture politics".

After shadow chancellor John McDonnell said Labour would end the working-age benefit freeze if it gained power, the party is set to table Budget amendments calling for income tax rises for high earners.

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"It's clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the United Kingdom without paying tax here in respect of that business", Hammond said during his budget presentation to the British parliament.

But lead opponent Ireland says a growing number of countries are grumbling about hidden problems with the tax, including that it could inadvertently snag European companies.

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.

This will make digital goods more expensive to consumers and may crimp on businesses' revenues.

Trade organisation UKHospitality welcomed yesterday's announcement and echoed industry sentiment that the tax should be used to support pubs and as a "springboard" for further rates reform.

"Fiscal Phil" has targeted online tech giants by announcing a new digital services tax in his Budget, promising to "deliver worldwide corporate tax reform for the digital age".