Financial Transaction Tax report – John McDonnell responds
John McDonnell MP, Labour’s Shadow Chancellor, responding to Intelligence Capital’s report Reinforcing Resilience: Making the UK a Citadel of Long-Term Finance, said:
“As Avinash Persaud says, we need to move beyond a world dominated by fast finance.
“This report presents one way to achieve that: through a comprehensive financial transactions tax that doesn’t leave loopholes for major areas of financial activity.
“The report shows that a comprehensive financial transactions tax can raise revenue for our under-resourced public services, improve the resilience of financial markets, and ensure that finance serves the people and the wider economy.
“We’ll carefully consider the report, which builds on Professor Persaud’s 2017 paper, as we continue to develop our plans for an economy underpinned by responsible, sustainable investment.”
Notes to editors
The report can be accessed here: https://progressiveeconomyforum.com/wp-content/uploads/2019/09/Reinforcing-Resilience.pdf
This report, published by Intelligence Capital, builds on Intelligence Capital’s 2017 paper, Improving Resilience, Increasing Revenue: https://www.robinhoodtax.org.uk/sites/default/files/Improving resilience, increasing revenue – May 2017.pdf
As part of its 2017 election manifesto, the Labour Party announced that it would extend the UK’s partial financial transactions tax (which currently applies to the purchase of shares) to corporate bonds and equity and credit derivatives transactions, and would amend the intermediary exemption on share transactions: http://labour.org.uk/wp-content/uploads/2017/10/Funding-Britains-Future.pdf.
The report calls for an end to the domination of fast finance – a point brought out especially in Professor Avinash Persaud (founder of the City-based thinktank, Intelligence Capital)’s preface: see page 2 – “Fast finance seems attractive but is fundamentally flawed.” The call is for the UK to become “a citadel of long-term finance” (see title).
The report builds on, and extends, Intelligence Capital’s 2017 paper on extending UK stamp duty, which formed the basis for Labour’s FTT proposal at the 2017 election (see pages 9-10). The report proposes “a more comprehensive approach” (page 10).
The report suggests extending the FTT to certain forex, interest rate, and commodities transactions would raise £2.13 billion (see table on page 21).
Because the proposal is to tax UK tax residents who make these trades, rather than to tax the location of the trades (Sweden’s 1980s tax was based on location), the proposal avoids the risk of capital flight (pages 21-22). See page 21: “moving the location of trading activity out of the UK would not allow … individuals and entities to avoid the tax.”