France hits back at Trump's 'moronic' wine tax threat

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CONSUMER GOODS

The French minister for agriculture, Didier Guillaume, has hit back at US President Donald Trump's threat last week to impose a tax on French wines, describing the move as "completely moronic."

Mr Trump made the threat in a tweet as a response to France's recent proposal to impose a digital tax on big US tech companies. He said that there would be "reciprocal action on Macron's foolishness" before adding: "I've always said American wine is better than French wine."

The President later reiterated the threat to reporters in the Oval Office. Minutes later, Mr Trump had broadened the threat claiming the response tax "might be on wine, it might be on something else."

The US is the biggest single export market for French wine and spirits by some way, and the industry is second only to aerospace in the country. In 2018, the US market accounted for €3.2-billion, nearly 25% of all French wine exports.

In an interview with BFM TV, Didier Guillaume said: "It's absurd, in terms of having a political and economic debate, to say that if you tax the 'GAFAs' (Google, Apple, Facebook, Amazon), I'll tax wine. It's completely moronic."

Mr Guillaume also rebuffed the US President other claims saying "American wine is not better than French wine."

Last week, Judd Deere, a White House spokesperson said that the US was "extremely disappointed by France’s decision to adopt a digital services tax at the expense of US companies and workers."

"France’s unilateral measure appears to target innovative US technology firms that provide services in distinct sectors of the economy," he added.

Two weeks ago, the 3% levy on digital services was approved by the French Senate. It will apply to firms with over €25-million revenue earned in France and €750-million worldwide.

France is the first member state to enact such a tax, though several others have already announced their own plans for a digital tax including the UK, Austria, Italy and Spain.

Proponents of the tax say that it is necessary because large multinationals such as Amazon and Facebook have been able to book profits in low-tax countries such as Ireland, regardless of where the revenue originates.

The US Chamber of Commerce said the tax "targets US firms almost exclusively and largely spares French companies. We have repeatedly urged European governments to address this issue multilaterally in negotiations at the OECD."

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