General election 2017: 'Robin Hood tax' on City pledged by Labour

Campaigner for so-called Robin Hood tax, dressed as Robin Hood, stands outside parliament, 2010 Image copyright Getty Images Image caption There has been a long-running campaign to introduce a so-called Robin Hood tax around the world

Labour says it would raise billions of pounds for public services with a new tax on financial transactions - known as a "Robin Hood" tax.

The party said extending the way shares were taxed and closing a loophole would bring in up to £26bn in the next Parliament, if it won the election.

It is also wants a tax avoidance crackdown and would require £1m+ earners to publish their tax records.

The Conservatives described Labour's plans as "a total shambles".

They said the proposal risked jobs and investment in the UK.

Labour has been facing calls to say how it would pay for a series of election pledges after its draft manifesto was leaked last week.

It says the final version, which has yet to be published, will be fully costed.

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Shadow chancellor John McDonnell said Labour's plans to increase taxes on City transactions would be a "Robin Hood tax" that would "make the financial sector pay its fair share" after the damage caused by the financial crisis.

Labour said it would extend the existing 0.5% stamp duty paid on shares to other financial assets, including investments known as derivatives.

It would also end an exemption, known as intermediaries relief, that applies to some banks and hedge funds, saying that together the measures would bring in between £4.7bn and £5.6bn a year.

Mr McDonnell added: "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."

Analysis

Image copyright BBC Sport

BBC business correspondent Emma Simpson

A Robin Hood tax isn't a new idea, far from it. John McDonnell has long campaigned for it.

The other name for it is a financial transactions tax, where a small levy is placed on certain financial transactions or trades.

Here in the UK, we already pay stamp duty when shares are bought and traded. Last year that raised just over £3bn.

Labour wants to go further and extend the levy to bonds and more complex financial instruments called derivatives, which it claims would raise £26bn over the course of the next Parliament, and help curb speculative computer-driven high frequency trading.

Labour says the plan mirrors a similar one being planned by the EU, but Europe's scheme is currently in the long grass.

The UK ruled out taking part, fearing it would hurt the City of London, where huge amounts of these trades are done.

If Labour's plans came to fruition, critics say these transactions would simply move elsewhere or the costs would be passed on to the likes of pensions funds, ultimately hitting consumers.

That's on top of worries over the potential loss of business and jobs in the City because of Brexit.

Mr McDonnell also said Labour would ensure "fairness" in the UK's tax system with a string of tax-avoidance measures.

These include increasing the number of people investigating the tax affairs of the wealthiest individuals, banning companies involved in tax avoidance from public contracts, sanctions against "abusive" tax havens, and forcing MPs to publish details of any offshore financial interests.

Labour's financial transaction tax plans were attacked by the Institute of Economic Affairs, which described them as "another example of the fallacy that corporations can be tapped for cash with no wider costs".

"In reality, it's always ordinary people who ultimately pay, including consumers and workers," said the free market think tank's chief economist, Julian Jessop.

Robin Hood or Mickey Mouse?

Lib Dem former Business Secretary Vince Cable said Labour's economy policy was "less Robin Hood than Mickey Mouse".

Jane Ellison, the Conservative financial secretary to the Treasury, recalled Labour London mayor Sadiq Khan's opposition to a financial transaction tax.

She said the plan "risks economic growth and jobs".

Ms Ellison added that the government had recovered an extra £140bn in tax since 2010 that would have been lost to evasion or avoidance.

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