UK’s Labour likely to extend reach of planned financial transaction tax

LONDON (Reuters) – Britain’s opposition Labour Party would seek to broaden a tax on financial transactions to cover foreign exchange, interest rate derivatives and commodities to raise further funds from London’s powerful financial center if elected.

FILE PHOTO: British Labour MP John McDonnell is seen as he leaves the BBC studios in London, Britain September 8, 2019. REUTERS/Peter Nicholls

John McDonnell, the second most influential man in the party, said Labour accepted proposals made in an independent report to more aggressively tax transactions, and said these would be reflected in their next policy pledges for government.

The move prompted an immediate outcry from the industry, with trade bodies saying the proposal was deeply irresponsible at a time of huge uncertainty for the British capital ahead of Brexit.

“All you want to hear from me is whether we are going to adopt the policy: yes” McDonnell said at the launch of the Intelligence Capital report. “They have come up with proposals which I think are unchallengeable in terms of how they can implement what we want.”

Britain is not due to hold another election until 2022, but with the country’s political system in gridlock over Brexit, Prime Minister Boris Johnson has proposed holding a snap election soon to break the impasse.

While opposition parties have refused to agree for now – wanting instead to prevent Britain from leaving the European Union without a deal – they are likely to agree to one later this year.

McDonnell has been at the vanguard of a left-wing shift in Britain’s main opposition party alongside leader Jeremy Corbyn. Once led by Tony Blair and Gordon Brown, it now proposes sweeping nationalization and an overhaul of the banking system.

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