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The City of London Corporation has today called on the Labour Party at its party conference not to risk the competitiveness of the City of London by advocating a financial transaction tax (FTT).
Prior the General Election in 2017, reports suggested the Labour Party said it would raise at least £4.7bn a year through the tax.
The City Corporation, which supports and promotes the City as a world-leading financial and business hub, will have a number of representatives at this year’s conference. The City Corporation will host a Brexit & financial services roundtable with the Fabians (25 September) and host a ‘Future of London’ reception with Prospect magazine later that day.
Leading the City of London Corporation’s attendance at the Labour conference, Policy Chairman Catherine McGuinness, said:
“The City’s financial services industry already contributes £72bn in tax each year, accounts for 1.1million jobs nationwide and provides essential financial products – from insurance policies and pensions to mortgages – for households across the country.”
“While Labour’s change in approach on remaining in the Single Market for transition is potentially helpful, at a time of great uncertainty for UK firms, they need policies which don’t undermine their competitiveness on the global stage. A financial transactions tax, however described, would be a unilateral policy which would weaken our hand and undermine our competitiveness.
“Anything which does that could result in the City losing its number one financial centre status, putting jobs at risk. In addition, any significant changes to financial regulation would inevitably see costs passed onto the consumer.”
In September 2011, the European Commission set out proposals for the implementation of a pan-European Financial Transaction Tax, covering a wide range of financial transactions. The Labour plan has some similarities with the proposed, but currently stalled, EU FTT, but is unconnected and stands on its own.
In 2013, the International Regulatory Strategy Group (IRSG), a practitioner-led group comprising senior leaders from across the UK-based financial and related professional services industry, published a report emphasising strong reservations about the imposition of pan-European tax and concerns about its potential impact. It highlighted the potential for a FTT that doesn’t exempt intermediaries as having a knock on effect on all participants in financial markets, reducing liquidity and increasing the cost of capital.