- 4 updates
The rates charged by payday loan companies are "excessive" and "a rip off," according to one Labour MP.
Stella Creasy denied Labour's tax plans would punish business unfairly as companies like Wonga "doubled" their profits.
Labour are expected to unveil plans for a new tax on payday lenders to help fund low-cost alternatives, such as credit unions, later today.
Payday lenders, which offer short-term loans to customers who run out of money while waiting for their monthly pay cheque, have been widely criticised for charging vulnerable individuals high interest rates which can top 5,000% a year.
Companies will have to pay an existing levy when they start being regulated by the Financial Conduct Authority next year.
Under Labour's proposal, payday firms will face an additional charge on top of this to boost the credit union market, where loans are available at much lower rates to households unable to access the mainstream credit market.
Payday lenders would be subject to a new tax to help fund low-cost alternatives, such as credit unions, under a Labour government, Ed Miliband is expected to announce today.
Details of the rates at which the levy would be imposed on the profits of companies like Wonga have not yet been announced.
Labour said it aims to raise enough cash to double the £13 million currently provided by the Government each year to fund the expansion of credit union