CBI Calls For Investment Tax Incentives

by Caroline Maxwell, Tax-News.com, London

06 November 2001

The Confederation of British Industry (CBI) called on Sunday for the government to introduce tax incentives in order to encourage individual investors to become more heavily involved in the stock market.

In a new report, entitled 'A Bigger Share', the CBI addressed the problems facing smaller quoted companies (SQCs) in an investment arena dominated by institutional investors concentrating their attentions on larger cap companies, and made a number of recommendations.

CBI Deputy Director-General, John Cridland commented on the findings of the report: 'There has never been a more important time for SQCs - they are key to the UK creating a high productivity, high growth economy,' he explained. 'But if the SQCs of today are to become the FTSE 100 companies of tomorrow the current lack of liquidity has to be tackled.'

The employers organisation suggested that smaller businesses could help themselves by marketing more to direct investors, making better use of the internet as an investment and information tool, and taking full advantage of electronic share trading platforms, which have lowered the cost of investment and allowed individuals to take control of their portfolios. However, President of the CBI, Sir Iain Vallance, insisted that the Confederation's recommendations were not an attempt to widen the investor base willy-nilly, and that the CBI only wanted to see greater direct participation from 'highly articulate' and 'well versed' investors.

Recommendations for possible government action to stimulate direct investment in small businesses included:

- The introduction of a tax incentive to encourage individuals to invest directly

- A review into the possible removal of stamp duty from share transactions

- Allowing the initial costs resulting from flotation to be written off against tax as legitimate expenses.

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