The 'One Big Beautiful Bill Act' that is currently before the US Congress, and that US President Donald Trump is anxious to sign into law, is controversial for many reasons. One would be the sweeping tax cuts that the bill will impose, partly funded by cutting government spending on healthcare programs. Another is the massive pressure it would add to America's already-bulging budget deficit. But for Australians, much of the focus has probably been on the so-called 'revenge tax' contained within the bill.
Many countries, Australia included, levy additional taxes on digital services within their borders, which would otherwise get off very lightly. This largely affects the US tech giants, such as Netflix or Amazon. These companies' services remain popular in Australia, but they find it easy to move these profits offshore in order to save taxes being levied.
This situation seems to have stuck in the craw of the Trump administration. It has consistently called out these countries, again including Australia, for 'ripping off' the United States. As a response, provisions for a so-called 'revenge tax' were included in Trump's 'big beautiful' budget bill that is currently before Congress.
US looks to drop contentious 'revenge tax' from its Big, Beautiful Bill
This revenge tax would have allowed the US president to retaliate against countries that levy these taxes with additional taxes and tariffs. It alarmed many Australian investors, particularly superannuation funds, who currently have huge amounts of capital invested in US markets.
However, in some good news for these investors, it seems the revenge tax is now off the table. According to reporting in the Australian Financial Review (AFR) this week, Trump's Treasury Secretary, Scott Bessent, has asked Congress to remove 'Section 899' from the 'big, beautiful bill'. This follows lobbying from the Australian government, amongst other nations.
Bessent has reportedly inked a deal with G7 nations that will walk back American obligations under a minimum global tax rate agreement that was signed by the Biden administration. As a tradeoff, the US will reportedly drop Section 899.
Well, that's the plan anyway. Congress, which is currently controlled by Trump's Republican Party, will still need to sign off on the changes. And the bill will still need to pass both houses of Congress, which is not yet a done deal.
Even so, many Australian investors, and super funds in particular, will welcome this potentially pleasing news today. Let's see if Bessent can make it stick.
