Labour’s planning an FTT

As the IMF says about FTTs:

How much overall investment would fall as a result of the STT would depend on the relative
elasticities of capital supply and demand. In a small, open economy, the after-tax return on
capital is determined on the world market. In response to imposition of the STT, capital
would flow out until its after-tax return was restored to the world market level. In the long
run, capital owners would therefore not bear the burden of the STT; it would fall on workers,
who as a result of the smaller capital stock would be less productive and receive lower
wages. If, however, the capital supply is less than perfectly elastic, the STT will lower the
return on capital, and capital owners will share the burden of the tax with workers.26

That is, the FTT is paid by the workers. And that initial part? That’s an awful lot of pensioners you’ve just made poorer too.

5 comments on “Labour’s planning an FTT

  1. Presumably, capital controls first, then the tax, and then a policy of defending the pound.

    Soros should probably be checking his brakes each morning.

  2. I don’t think the Labour Party, particularly this version, has ever been particularly bothered about a shrinking economy.

  3. We were told (and Labour still agrees, AFAICT amidst the ever-increasing and confused verbiage they produce) that leaving the EU without a deal to ensure ‘passporting’ would be devastating for the City. In fact, as predicted by those with any knowledge of the subject, the result has been almost undetectable (institutions exposed to this risk have already taken the necessary steps to mitigate it).

    But the far greater threat to the City would be some form of FTT, which the Berlaymont is itching to impose. Unless replicated in other global financial centres (fat chance), it would be devastating, as all trading moved offshore.

    Strangely, such issues don’t seem to have been covered in the risk assessment for Remain – the inverse of Yellowhammer.

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