Jeremy Corbyn will force Labour to introduce a new tax on the City in a move that pits him against his newly elected mayor.
Jeremy Corbyn will force the Labour party to introduce a new tax on the City, in a move that pits the Labour leader against his newly elected mayor.
The Labour leader told activists at the party’s final Remain rally in London that a Labour government would introduce a financial transactions tax – dubbed the Robin Hood tax -- on the City, stoking simmering divisions between the left-wing leader and other senior figures in the party.
Standing side-by-side with London Mayor Sadiq Khan, who is publicly opposed to the measure, Mr Corbyn said the levy was “a very sensible proposal I am sure everybody in this building would agree with”.
Mr Corbyn’s decision to speak up for a policy he knows the London mayor opposes while the pair shared a public platform together, clearly irked Mr Khan, who told Sky News afterwards his opposition to any pan-European tax on financial trading was “quite clear”.
"I do not want a unilateral tax on businesses in our City," he said. "I am in favour of jobs, I am in favour of trade and investment."
But the Labour leader was equally robust in his response, telling Sky News that he would make the financial transaction tax Labour policy and suggesting his London mayor had better fall into line.
"Sadiq and I will be having some very interesting discussions about it," said Mr Corbyn. "I am sure he will come round to the idea. His whole campaign is about equality in London. It's about equality and justice and is about people paying their share."
Mr Khan said during his mayoral campaign he was publicly opposed to a financial transactions tax and said he wanted to be the "most business-friendly mayor of all time”, pitting himself against the Labour leader and shadow chancellor John McDonnell.
The public clash, coming on the final day of the referendum campaign, is a reminder that relations between the Labour leader and some of his most senior lieutenants remain strained.
The London mayor is a hugely powerful figure in the Labour party after being elected with the biggest-ever personal mandate but has jarred with Mr Corbyn in recent weeks. In his first major interview after being elected mayor in May, he warned Mr Corbyn Labour would never win a general election without trying to "reach out" to Tory voters.
Some in the Labour leader's team believe Mr Khan intends to use his base at City Hall – and the profile it gives him – to set up a rival power base. The Financial Transaction Tax could be the first piece of meaty policy where the pair lock horns.
The tax – first proposed in 2011 – aims to create a pan-European levy on the financial sector by imposing a small tax on almost all EU bond, share and derivative transactions. Supported by 11 eurozone countries, including France and Germany, the UK blocked the levy.
The tax – which was originally designed to raise £50bn – has long been opposed by the City, which has argued the tax would clog up markets and also warned the extra costs of it would be passed on to investors and consumers.
But Mr Corbyn attacked the Government for blocking the levy, which he claimed "would help prevent the sort of banking crisis we saw in 2008".
"Sadly, the British Government didn’t agree with it ... their answer (was) to rush across to Brussels with an army of lawyers in the Eurostar to threaten the EU with legal action if they vote for a transaction tax.
"I’ll tell you this: a Labour government wouldn’t do that, a Labour government would want a financial transaction tax, that is what we are saying."
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