Tories Hint At Share Tax Repeal

by Robert Lee, Tax-News.com, London

29 August 2006

The Conservative Party leadership has hinted that it would be prepared to abolish stamp duty on share dealing as part of plans to revamp the UK's pension system.

In comments published by the Sunday Telegraph, Shadow Chancellor George Osborne said that one of the party's main goals is "repairing damage done to the pension system" by the current Chancellor of the Exchequer, Gordon Brown.

"Of all the damaging things Gordon Brown has done to the economy, the single most destructive has been the attack on personal pensions," he told the paper.

"We need to look at new ways of repairing the damage and that is why I am particularly keen to look at stamp duty on shares," he explained.

Stamp duty is currently levied at 0.5% on the profits from the sale of securities. London is the only major financial centre in the world where such a tax is charged on share dealing, and the City has long warned that the continued existence of the tax threatens to erode its competitiveness compared to other financial centres such as New York, Frankfurt and Hong Kong.

A study published by the conservative think tank the Bow Group has calculated that repealing stamp duty on shares would add GBP80 billion (US$150 billion) on to the value of shares, helping to boost personal pensions.

However, the Treasury has countered that the Tories would have to find GBP4 billion from other sources of revenue to plug the hole left by abolishing stamp duty on share dealing.

Nonetheless, Osborne's comments are being viewed as significant as it is the first time since David Cameron assumed the party leadership late last year that the Tories have broken their self-imposed silence on taxation. While committed to reducing the tax burden in the long term, Cameron says the party must put economic stability before tax cuts in the short term.

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