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The Labour Party has pledged a sweeping crackdown on tax avoidance and to introduce a so-called ‘Robin Hood Tax’ to fund its ambitious programme for Britain’s public services. The crackdown would be the largest in British history.
Under the new rules, Labour plans to raise as much as £4.7 billion by modernising the stamp duty regime on share trading with a possible £26 billion to be raised over the course of the next Parliament.
Compare this with the current system of austerity where working people are using foodbanks in record numbers (in 2010 figures were 61,468, in 2017 its 1,109,309 and counting). The National Health Service has been cut to the bone, yet further cuts and even greater problems can be anticipated.
Welfare claimants have suffered endless cuts and a ‘reformed’ welfare system dispensing only to those able to fight for their basic entitlements. Not content with a welfare policy condemned by the UN for its grave, systematic violations of human rights, Theresa May still refuses to rule out cutting welfare even further. Pensions have been raided, the retirement age has been increased and so on.
But how would Labour fund their changes? After all, the principle objection to ambitious public spending is very often to ask how extra money would be raised. The answer, by financial standards, is relatively simple. Labour pledges to close an existing loophole commonly used by banks and hedge funds, a loophole that currently costs the Treasury an estimated £1 billion annually.
The Robin Hood Tax would modernise the existing 322-year old stamp duty system, incorporating new forms of highly-traded financial assets such as options on shares. With a 0.5% tax on transactions, the loophole would be closed, tax revenues significantly raised and Labour would have done something the Tories have pledged to do, but woefully under-achieved.
‘Robin Hood’ taxes shouldn’t be mistaken for the ‘Tobin Tax’ proposed by James Tobin, Laureate of the Nobel Memorial Prize in Economic Sciences. Tobin’s idea covered only all ‘spot conversions’ (very short-term conversions of large amounts of one currency into another). A Robin Hood Tax, on the other hand, is rather broader in scope, covering all manner of short-term transaction taxes, thereby generating more revenue.
In short, Labour (unlike the Tories) intends to make a meaningful effort to tackle tax avoidance, raising tax revenues and rebuilding public services without the brutality of continued austerity or simply raising income tax on the working population as a whole.
95% of working people will not pay more tax under Labour and, if Labour successfully implemented the policy, Britain’s public services and Welfare State could be not only rebuilt, but improved.
Austerity isn’t working. Tory promises on tax avoidance have been broken. The public purse has been raided over and over again.
Labour is pledging something different. Something better. Something for the many, not the few.