Labour Party under fire over "Robin Hood tax" plans for City of London, Jeremy Corbyn's latest manifesto pledge

Francesca Washtell
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Labour's John McDonnell Addresses An Election Rally In His Home Town Of Liverpool
Labour shadow chancellor John McDonnell said the policies would help fund increased public spending (Source: Getty)

The Labour Party is under fire for new proposals aimed at cracking down on tax dodgers and a so-called "Robin Hood tax" on financial transactions.

Labour says its plans would both create a fairer tax system and help "bring long-term stability to banking by eliminating the most disruptive forms of speculation" if the party wins the General Election on 8 June.

It claims an expert analysis shows that £4.7bn can be raised through the policies that could go towards increased government spending.

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The Robin Hood Tax is aimed at "modernising" the 322-year-old stamp duty regime on share trading, closing down an existing loophole for banks and hedge funds, which costs the Treasury £1bn a year.

It will also incorporate new forms of highly-traded financial assets, including financial derivatives like options on shares.

"It's naïve to think that the burden of financial transactions taxes will only fall on banks and speculators," said Julian Jessop, chief economist at the Institute of Economic Affairs.

"The increased costs would inevitably be passed on to customers, including small investors, in the form of higher charges, and to borrowers in the form of higher interest rates.

"Labour’s promise to crack down on tax dodgers is a good soundbite and it's surely right that companies and individuals should pay what is due. But successive governments have made similar commitments and it's unclear that Labour’s proposals are a major step forward."

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Based on advice from economists, tax collectors and tax lawyers, the party has also "prepared a comprehensive programme of tax reform that will clamp down on the social scourge of tax avoidance, freeing up billions for our public services".

This would include closing loopholes, clamping down on tax havens, and "shining a light on the illicit activities of those super-rich seeking to duck their responsibilities to the rest of society".

"All we're asking for is fairness in our tax system," said shadow chancellor John McDonnell.

"By making those who trade in financial derivatives pay a small fraction of their profits, we can help properly fund our public services. Instead of Conservative tax breaks for the super-rich, we’ll put more money in people’s pockets, protect 95 per cent of people from any rises in income tax, National Insurance and VAT, and build a Britain for the many, not the few."

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The proposal has been slammed by groups such as the TaxPayers' Alliance (TPA), whose director Alex Wild said the idea "that vast sums can be raised simply by 'clamping down' on tax avoidance is... delusional".

An ORB poll out today put the Conservatives firmly in the lead ahead of the snap General Election. The Conservative party came in at 46 per cent the poll for the Telegraph. This was unchanged from its previous position, while the Labour party gained one per cent to reach 32 per cent of the vote.

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