SHADOW chancellor John McDonnell has outlined Labour’s plans to reform the City today that include a financial transactions tax (FTT) expected to raise around £5 billion a year for public services.
His speech outside the Royal Exchange marked exactly 10 years since Lehman Brothers went bankrupt and triggered the biggest global financial mess since the Great Depression.
A rally in support of the “Robin Hood tax” is organised by groups including Unite, the Robin Hood Tax campaign, Christian Aid, War on Want, Disabled People Against Cuts and the Tax Justice Network.
Unite assistant general secretary Steve Turner said:
Ten years ago, our failing banks were bailed out with £130bn of taxpayer money–our money.
In return we got sold out, with a decade of miserable austerity and cuts to public services and wages resulting in rising child poverty, a homelessness crisis, longer hospital waiting times and cancelled operations.
Without action, we are sleepwalking into another crisis. At the rally we are standing up to finance to say never again.
Labour points to the report “Improving Resilience, Increasing Revenue” by economist Professor Avinash Persaud that states:
[An FTT] would bring in a further £4.682bn of revenues, raising the stamp duty on financial transactions to close to £8bn.
Although this is a significant sum, it would still equate to just 1.0 per cent of all taxation, only 5 per cent of the Gross Value Added of the financial sector, and 15 per cent of all corporation taxes.
Mr McDonnell will say that ordinary people are still paying the price for a financial crisis they did not create, while having to endure cuts to public services, stagnating wages and falling living standards.
He is also expected to say:
Most now accept that the crash was caused by a combination of greed and deregulation that turned the City into a multibillion-pound casino.
In addition to the need for greater regulation, one of the key lessons to be learnt from the crash is that never again must we allow finance to become the master of the economy, rather than its servant.
Mr McDonnell will add that Labour in government will set up a Strategic Investment Board. This would incorporate the Treasury, the Bank of England and the government’s business department, with business and trade union leaders to secure and plan long-term investment needed for the fourth industrial revolution.
Another £6.5bn would be raised by Labour’s Tax Transparency and Enforcement Programme, to make wealthy individuals and companies pay their fair share of tax.
Labour is committed to Scandinavian-style public reporting of personal incomes over £1 million to reduce the scope for tax avoidance.
A Labour government will also set up a £250bn National Investment Bank, and consult on breaking up the Royal Bank of Scotland to create local public banks.