The European Commission is abandoning plans for a digital tax on tech giants, likely to spare relations with the US.
In the run-up to new negotiations on the multiannual budget from 2028, the digital levy is being removed from the list of proposed EU taxes. The decision appears strategic because Donald Trump threatened tariffs in response to national digital taxes. American tech giants will therefore not face additional levies.
New Levies in Place
Instead of a digital tax, the Commission is now looking at other taxes, targeting waste from electrical appliances, tobacco products, and large companies with more than 50 million euros in annual turnover. These three levies combined could generate 25 to 30 billion euros per year. The goal would be to repay the common EU debt after the coronavirus crisis.
At the same time, the proposal also confirms older proposals such as a CO2 border tax and a portion of the revenues from the Emissions Trading System (ETS). The expansion of ETS to buildings and road transport from 2027 is deliberately kept outside the EU budget, to temper Eastern European opposition.
Tense Negotiations to Follow
The proposed taxes must be unanimously approved by the member states, which leads to difficult negotiations. Sweden and Southern European countries, in particular, are already reacting critically. The official proposals will follow on Wednesday, writes Politico.
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