Labour pledges ‘Robin Hood’ tax on City
LABOUR is pledging to impose a “Robin Hood Tax” on financial transactions, raising billions for public services, if it gains power in the General Election on June 8.
Shadow chancellor John McDonnell said the levy would bring in up to £26bn over the course of the next parliament, while eliminating destabilising forms of speculation on the financial markets.
However, such a move would be likely to cause an outcry in the City amid fears it would undermine the competitiveness of the financial sector at a time of uncertainty during the Brexit negotiations.
It comes as Labour comes under pressure to explain how it will pay for its ambitious programme of re-nationalisations and expanding public services, set out in a leaked draft of the party’s election manifesto.
The party said it would revise the 322-year-old stamp duty regime on share trading, closing down a “loophole” for banks and hedge funds, and extending it to cover financial “derivatives” and other trades.
At the current rate of 0.5% per transaction, the party said the move would raise £4.7bn in 2016/17, rising to £5.6bn in 2021/22.
It said the plan mirrored the financial transactions tax being prepared for introduction in 10 European countries.
At the same time, the party said, it would carry out “the biggest crackdown in this country’s history” on tax avoidance, with a programme of tax reform.
Following the disclosures in the leaked “Panama papers” in 2015, it said a Labour government would clamp down on the secretive shell companies and offshore tax havens used by the “super rich” to shield their wealth.
Mr McDonnell said the changes would restore “fairness” to the system after the bail-out of the banks following the financial crash of 2008.
“The next Labour government will introduce a ‘Robin Hood Tax’ to make the financial sector pay its fair share after it received huge public bail-outs in the crash,” he said.
“Ordinary people are still being made to pay by the Tories for a crisis they didn’t cause through... spending cuts.
“By making those who trade in financial derivatives pay a small fraction of their profits, we can help properly fund our public services.”