Chancellor must “rule out” cutting Digital Services Tax and leaving £5 billion black hole in public finances

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The Liberal Democrats are calling on the Government to rule out cutting or abolishing the Digital Services Tax (DST) after figures from the Spring Statement show it is set to raise over £5 billion in the coming five years.

Buried in the small print of the documents released alongside the Spring Statement yesterday, it was revealed that the DST is forecast to raise £5.3 billion by 2029/30, up £400 million on the previous forecast in the Autumn.

The revenues from the tax are forecast to rise from £894m in 2025-26 to £1.2 billion in 2029-30.

It comes as the Chancellor confirmed previously that changing the tax is under discussion as part of negotiations with the US over tariffs, with the UK Ambassador to the US Peter Mandelson recently saying "the tax itself is under discussion” and signalling a range of options were on the table.

The Liberal Democrats said it would be “unforgivable” for the Chancellor to cut taxes on US social media giants to appease Musk and Trump, while slashing support for people with disabilities. 

The Digital Services Tax is a levy paid by the biggest multinational social media companies including Elon Musk’s X (formerly known as Twitter). Cutting or scrapping it would represent a U-turn from Labour on their previous position in 2022 that the DST should be increased to 10%.

Liberal Democrat Treasury spokesperson, Daisy Cooper MP said:

“It would be unforgivable if the Government goes ahead with cutting taxes for US tech barons to appease Musk and Trump, all while slashing support for disabled people and front-line public services to the bone.

“The Government’s own figures show that scrapping the tech tax would blow a £5 billion hole in the public finances. That would mean more tax hikes on ordinary families and businesses or more cuts to public services to pay for it.

“Ministers need to confirm that they won’t bow down to Trump’s threats, and that instead the UK will stand strong with our allies in Europe and the Commonwealth. That means the Chancellor needs to categorically rule out cutting the Digital Services Tax in any way.”

ENDS

Notes to Editor:

The OBR’s latest revenue forecasts for the DST can be found here.

Bloomberg and the Financial Times previously reported that the DST could be slashed or axed. 

Labour’s previous position on the DST can be found here.