London Stock Exchange Urges Treasury To Phase Out Stamp Duty

by Jason Gorringe, Tax-News.com, London

26 March 2003

Staging its annual ritual Stamp Dance, the London Stock Exchange has urged Chancellor Gordon Brown to abolish stamp duty on share deals, arguing that it is destroying the competitiveness of London as one of the world's top three financial centres, and making an already difficult market place worse.

LSE chairman Don Cruickshank argued this week that while the cost of stamp duty tends to be easily absorbed during a booming market, it tends to act as a drag and a disincentive to investment when times are bad. Therefore, the abolition of the levy would be just the injection the capital markets need, given the overall pessimism that continues to pervade through the markets.

Brian Mairs of the Association of Private Client Investment Managers and Stockbrokers told the BBC that even the abolition of the tax on small cap companies such as those quoted on the AIM or OFEX would act as "a huge psychological boost".

Cruickshank also put the case that the 0.5% rate at which stamp duty is paid in the UK is far higher than that of Germany and the US, and therefore threatens the LSE's position as one of the world's top three stock exchanges.

However, Mr Brown is unlikely make such a generous gesture in his coming budget given the worsening fiscal situation projected over the next couple of years. It is estimated that ending stamp duty on share dealings would cost the government somewhere in the region of £2.5 billion a year.

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