Labour needs to adopt a unilateral approach to the Financial Transaction Tax

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Chris Leslie MP, a member of the Labour shadow treasury team, said this in his weekly email to constituents and other interested parties yesterday:

The time has come for George Osborne to get serious about a financial transaction tax (an ‘FTT’, also sometimes called a ‘Robin Hood Tax’). If ever there was a time to seek international consensus on an FTT it is now, as countries continue to deal with the aftermath of the global financial crisis and the large deficits it created. Deducting a tiny fraction of one percent of the value of trades in equities, bonds and derivatives could raise billions if introduced in a concerted way across the principal world financial centres.

So far so good, and welcome. But the trouble then becomes apparent:

This week I visited the United States to begin the process of building alliances on this issue. From the discussions I had at a conference on the FTT in Washington DC  and from the conversations I had in Congress, I believe there is growing interest in the idea and a real diplomatic opportunity for Britain to strike an agreement with American policy-makers and secure a plan for the phased introduction of a financial transaction tax process simultaneously in Wall Street and London.

 

And that's when Labour falls flat on its face. We need an FTT. We need to to stop City excess. We need it to ensure capital is properly allocated to productive activity in the UK. We need it to correct the under-taxation of the financial services sector. And we don't need US approvale to do it. In which case this comment is not good enough:

With eleven EU countries including France and Germany now opting for an FTT, the Chancellor can either sit on the sidelines, or instead talk to the Americans and the new US Treasury Secretary Jack Lew about a joint approach which avoids the risk of traders playing one jurisdiction off against the other. If Britain and America can move forward together so that Wall Street and London trades are simultaneously brought into a financial transaction tax regime, real progress could be achieved in safeguarding vital services and economic growth. It is time for our Chancellor to wake up and seize the moment.

Labour's not in business to coat tail (or at least I hope it isn't). Labour should be in business to stand up on grounds of principle to make the right decision at the right time. Waiting for US permission to proceed on a Financial Transaction Tax is not necessary. The EU has moved on the issue. Now it's time for Labour to do so, unilaterally. A little courage is needed, I think.