Labour’s Financial Transactions Tax – Gonna Be A Disaster Folks

The Labour Party Manifesto tells us that they’re going to extend the financial transactions tax – stamp duty effectively – out over other financial assets. FX, interest rate options and so on.

This is going to be a disaster. The background to this comes from these two places:

It’s in two reports:

https://www.robinhoodtax.org.uk/sites/default/files/Improving%20resilience,%20increasing%20revenue%20-%20May%202017.pdf

And then extended to tax more stuff:

https://progressiveeconomyforum.com/wp-content/uploads/2019/09/Reinforcing-Resilience.pdf

All of which is drivellingly, incompetently, wrong. The actual truth of an FTT was explained, by me, at length some time ago.

The case against a financial transactions tax IEA Current Controversies Paper No. 33

Effectively it’s pensions and pensioners that end up paying it, it shrinks the economy and thereby reduces, not increases, total tax revenue and it makes markets less efficient and more costly.

It’s a damn stupid idea, in short.

But, you know, Labour, elections, why allow reality to intrude?

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Quentin Vole

It would be disastrous. But, unlike income tax, voters won’t immediately see the negative effect on their pay packet. So it may well be positive in electoral terms.