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July 26 (Reuters) - Britain's opposition Labour Party has proposed new taxes on financial transactions, targeting London's world-leading trade in derivatives and bonds for a 4.7 billion pound ($6 billion) windfall to help fund its left wing policy agenda. Despite losing a national election in June, Labour describe itself as a 'government in waiting' and is campaigning in the hope that Theresa May's fragile minority government will fall, triggering fresh elections. Opinion polls show Labour ahead of May's Conservatives. In a series of meetings with financial firms last week the party presented its proposal, first announced in May, for a expanded set of taxes on trading in bonds and derivatives.
Below are details of Labour's proposals: - Labour is proposing to make a wider range of assets liable for an existing tax, known as Stamp Duty Reserve Tax (SDRT). - SDRT is currently charged to the buyer on share transactions at a flat rate of 0.5 percent based on the amount paid for the shares. - It is applicable to purchases of shares in a British company, foreign companies with a share register in Britain and 'options' instruments which create a right to buy shares. Other share transactions may also be liable. - In 2015/16 SDRT raised 3.32 billion pounds - Labour propose to make SDRT apply to derivatives and bonds transactions at the following rates. British government bonds would be exempt.
Instrument Rate (percent) Revenue
Derivatives 0.5 for non-financial firms 2.45
0.2 for financial firms
Bonds 0.5 for non-financial firms 1.24
(excluding gilts) 0.2 for financial firms
- Labour also propose to remove an existing exemption for market-makers - financial institutions who commit to selling and buying in order to facilitate easier trading for others. - Labour estimate this rule change would raise an additional 0.97 billion pounds. - The party's 2017 election manifesto estimated the changes would raise 4.7 billion pounds in 2016/17, rising to 5.6 billion in 2021/22.
BACKGROUND - When launching the policy, Labour said it would "eliminate the most destabilizing forms of speculative high-frequency trading." - Labour also describe it as a "Robin Hood Tax," after the fictional English folk hero who stole from the rich to give to the poor. - Labour's proposals are separate to an EU proposal for a financial transactions tax. - The EU proposed an FTT in 2011, followed by a modified version in 2013 to make banks compensate taxpayers for public bailouts in the financial crisis. The plan is backed by 10 euro zone countries but has struggled for years amid a lack of agreement on technical details, with Estonia pulling out and little prospect of a deal soon. ($1 = 0.7674 pounds)
(Reporting by William James, Andrew MacAskill and Huw Jones; Editing by Keith Weir)