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Labour likely to extend reach of planned financial transaction tax

Labour likely to extend reach of planned financial transaction tax
FILE PHOTO: British Labour MP John McDonnell is seen as he leaves the BBC studios in London, Britain September 8, 2019. REUTERS/Peter Nicholls -
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PETER NICHOLLS(Reuters)
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LONDON (Reuters) – Britain’s opposition Labour Party is likely to extend the reach of its planned levy on financial transactions if elected, its would-be finance minister said on Thursday, as he endorsed a report looking at ways to better fund public services.

John McDonnell was responding to a new report by Intelligence Capital on the possible scope of such a tax. Labour has previously backed the idea of a financial transactions tax on certain types of assets and trades.

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

The left-wing opposition party held a series of meetings with top finance executives in 2017, setting out how it would levy taxes on one of the world’s biggest financial trading centres if it won power from the Conservative Party.

McDonnell, the second most powerful man in the Labour Party, said on Thursday they were still honing their plans for any future election but said a Labour government had the chance to lead the debate on a global movement to tax financial transactions.

Labour has previously proposed new taxes on transactions in derivatives and bonds. The report by Intelligence Capital said the proposed tax could apply to the wholesale foreign exchange market, including spot and derivatives, interest rate derivatives and commodities.

It proposed taxing end user purchasers who are tax resident in Britain.

British Prime Minister Boris Johnson has said he wants an election to break the impasse over Brexit but opposition parties including Labour have refused to agree until they can guarantee that Britain will not first leave the European Union without a deal on Oct. 31.

That means an election could come later this year.

UK Finance, a trade body for the banking and finance industry, said the tax would put a levy on growth and said at a time of such uncertainty for business, policymakers should focus on supporting the industry to grow and employ more people.

(Reporting by Kylie MacLellan; writing by Kate Holton; editing by William James and Toby Chopra)

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