Treasury Secretary Talks DST, China Trade in Senate Testimony
Treasury Secretary Steven Mnuchin, testifying on the president's budget at a hearing Feb. 12, was asked repeatedly about what the Organization for Economic Cooperation and Development might do on taxing digital companies, precluding France's digital services tax.
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France is not collecting its DST while waiting for a broader solution; retaliatory tariffs for the DST are also on hold, as a result.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said in his opening statement, “I'm ... encouraged by the progress that has been made at the OECD to reach a multilateral global tax agreement on the digital economy.” He said that he and Sen. Ron Wyden, D-Ore., the top Democrat on the panel, agree “that unilateral measures that discriminate against American companies cannot be tolerated.”
When asked by Sen. Pat Toomey, R-Pa., about progress at the OECD, Mnuchin avoided giving any insight, instead crediting the president's involvement for the truce with France. “That is a priority for us for the rest of this year,” he said, referring to negotiations at the OECD.
Sen. Ben Sasse, R-Neb., asked Mnuchin, a top negotiator in the China trade talks, to explain what the top priorities are for phase two, and to give some sense of when it might be achieved.
Mnuchin replied: “Obviously our biggest focus is implementing phase one that has to a certain extent has slowed down given the virus.” He said that phase two may be gradual -- he said it could be 2a, b, c, d, but declined to say what comes first. He said the president “doesn't want to set arbitrary timelines,” but that the fact that the U.S. has left “significant tariffs” on Chinese imports creates an incentive for China to do phase two.
Sasse expressed skepticism that China would follow through on its phase one commitments on forced technology transfers or intellectual property. Mnuchin replied, “The difference here is this agreement has real enforcement.”