UK

Labour Announces A 'Robin Hood Tax' To Help Fund Public Services

'Ordinary people are still being made to pay by the Tories.'

13/05/2017 22:03 BST | Updated 14/05/2017 09:01 BST

Labour has announced it will introduce a ‘Robin Hood Tax’, which they expect could raise £26 billion over the course of the next parliament, to invest in public services.

Jeremy Corbyn’s plans are intended to “create a fairer tax system” and raise billions in government revenue.  

At the current rate of 0.5% per transaction, the party said the move would raise £4.7 billion in 2016/17, rising to £5.6 billion in 2021/22 - the final year of the next parliament.

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Shadow Chancellor John McDonnell said that 'ordinary people are still being made to pay by the Tories for a crisis'.

The Conservatives said it was “madness” and warned that it would lead to the loss of jobs and economic growth.

It came as Theresa May unveiled Tory proposals to support local authorities in building a new generation of council homes to help fix the “broken” housing market.

Labour also said it will “undertake the biggest crackdown on tax avoidance in this country’s history” and “bust open the secretive networks of avoidance” that can cost public services billions.

Labour set out its plan for a financial transaction tax after coming 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 an existing “loop hole” for banks and hedge funds, and extending it to cover financial “derivatives” and other highly-traded assets.

Labour said they want to close down an existing loophole for banks and hedge funds, which the Opposition says is costing the Treasury £1 billion a year.

It said the plan mirrored the financial transactions tax currently being prepared for introduction in 10 European countries.

John McDonnell, Labour’s Shadow Chancellor of the Exchequer, said: “The next Labour Government will introduce a ‘Robin Hood Tax’ to make the financial sector pay its fair share after it received huge public bailouts in the crash.

“Ordinary people are still being made to pay by the Tories for a crisis they didn’t cause through the worst spending cuts for generations.

“All we’re asking for is fairness in our tax system. 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% 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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Jeremy Corbyn's party pledged to tackle tax dodgers.

Labour also pledged to tackle tax dodgers, with such avoidance being an “exclusive club for the global super-rich that working people and small businesses don’t have access to”.

“A dense network of shell companies, secret bank accounts, and governments too happy to look the other way have enabled vast wealth to hoard offshore,” Labour said in statement.

“Labour will close the loopholes, clamp down on the tax havens, and shine a light on the illicit activities of those super-rich seeking to duck their responsibilities to the rest of society,” the statement added.

“We will put the wealth they try to hide into public service and build an economy for the many, not the few.”

For the Conservatives, Treasury minister Jane Ellison dismissed the plans as a “total shambles” from Corbyn.

“The transaction tax has been described as ‘madness’ by his own Mayor of London because it risks economic growth and jobs, and just weeks ago in Parliament Labour blocked measures to stop almost £9 billion worth of tax avoidance,” she said