Jeremy Corbyn’s proposed ‘TechTax’ would stifle innovation

The Labour Leader’s ‘digital license fee’ is a tax on technology which would damage huge sectors of the economy, says Andrew Bird.

Figures out in May showed the UK technology sector is growing more than two-and-a-half times faster than the overall UK economy. It is inspiring news which should motivate our political leaders to encourage an environment which allows this progress to continue.

The Tech Nation Report 2018 revealed that the UK’s digital tech sector is worth nearly £184bn to the economy, a rise of £14bn in 2016: That’s about the same as the budget for the department for International Development.

It also found London was the second most connected place for tech in the world, behind Silicon Valley – but it was not just the capital which has benefited from this growth. There are 16 towns in the UK with a high proportion of the population employed in tech, including Burnley, Enniskillen and Swindon.

It shows that what started off as Tech City is now becoming Tech UK.

The then digital secretary Matt Hancock said the report emphasised the UK’s “huge potential”. “Our world-leading tech firms are growing fast and creating the high-skilled, high-paying jobs of the future. They are a hotbed of innovation, creativity and entrepreneurial spirit.”

Yet today, in Edinburgh, the leader of the opposition proposed taxing this same industry.

It is a policy which may as well have been ‘I want to stifle innovation’.

He may have said his ‘digital license fee’ was for “tech giants”, name checking the likes of Amazon and Facebook who have faced condemnation in the media for their business practises – including tax avoidance – but it is the same industry as the TransferWise’s and Deliveroos of the world.

And where would this money go? To fund the BBC. To make the BBC “fairer” and “modernised for the digital age”.

“A digital licence fee, supplementing the existing licence fee, collected from tech giants and internet service providers, who extract huge wealth from our shared digital space, could allow a democratised and more plural BBC to compete far more effectively with the private multinational digital giants like Netflix, Amazon, Google and Facebook,” he told the audience.

The BBC has a globally recognised brand and opportunities tech start ups in Shoreditch can only dream of: if it cannot harness that power and shift into a platform which its viewers, listeners and readers want, then it deserves to fail.

The clamour for the license fee to be scrapped is increasing in volume, particularly from those who use subscription services as their primary viewing platform. Millenials are more likely to watch Netflix than listen to The Archers, but why should the innovation of the digital streamers be taxed to fund last century’s organisations?

A tiny proportion of companies can start with billionaire backing: the majority of them start of as ideas in the heads of strivers and people who want to make a difference; to their own lives, to their community, to the planet. And yes, most of them won’t achieve the status of google, where their very name becomes a verb. But who starts a business with the hope of it being ‘moderately successful’ – even if the desire for huge success is only lived out in dreams rather than investment pitches?

The message being disseminated by Jeremy Corbyn today is that the taxman has his eye on the tech sector: it’s become a victim of its own success and ripe for a special tax to fund the personal projects of politicians which fit their dogma.

This is the last message the industry needs if it is to continue to thrive. The UK ranked third in the world for total capital invested in digital tech companies, behind the US and China but that is unlikely to continue in an economy where success equals a higher proportion of the tax burden and moreover, that you have to pay for uncompetitive operations to exist, even if they are your competitors.

It would be far better for politicians to direct their sound-bites and headline grabbing policy suggestions towards delivering more efficiency of tax spend, without the myopic push to simply get more tax revenues. Government – central and local – is so immensely wasteful, it should be looking to learn from tech, not looking to tax it.