Clifford Chance report criticises Labour’s ‘Robin Hood tax’ policy

Magic circle firm Clifford Chance has attacked proposals by the Labour Party to create a broad financial transaction tax (FTT) by extending stamp duty – a policy also known as the ‘Robin Hood tax’.

Labour’s expressed intention with the FTT policy is to raise £4.7 billion a year in tax revenue from the financial sector to fund public services, while it has also said that the policy would create greater transparency in financial services and reduce the kind of systemic risk in the sector which led to the worldwide financial crash in 2008. However, Clifford Chance has argued that implementing a FTT would not raise tax revenue, but lower it by incentivising companies and investors to conduct their financial transactions outside the jurisdiction of the United Kingdom. As The Lawyer reports, the firm also criticised the lack of any intermediary exemptions in Labour’s proposal, which would mean investment funds and institutional investors being hit hard. 

Dan Niedle, partner at Clifford Chance, said: “The idea that tax is an unallied good is a non-sequitur. There are big controversies around high-frequency trading, but if you want to ban it, ban it. If you want to tax the financial sector, then tax the financial sector. Labour’s proposals are going to hit big investors and pension funds the hardest, but this won’t hit the banks.”