UK Stock Exchange Pleads For Stamp Duty Cut

by Jason Gorringe, Tax-News.com, London

23 October 2001

Making his annual pilgrimage to Whitehall to plead for the removal of stamp duty on UK share transactions, Don Cruickshank, chairman of the London Stock Exchange, will tomorrow meet Gordon Brown, Chancellor of the Exchequer. The meeting will also be attended by John Coombe, chairman of a group that represents finance directors of major listed companies.

This is the time of year, when the 'pre-budget statement' is being prepared in the Treasury, for lobby groups to try to influence the Chancellor's thinking. It used to happen in early spring, before the March budget, but nowadays the pre-budget statement is the more significant event, and draws the attention of supplicants.

Stamp duty, which must have claims to be the UK's oldest tax, is levied at 0.5% on share transactions, raking in £3.7bn for the Treasury last year and slated to bring in £4.5bn this year. It's also one of the cheapest taxes to collect, since the work is done on the Government's behalf by share traders, and there is relatively little that can be done about it in the way of avoidance or mitigation, at least where public share purchases are concerned.

Given the increasing strain on public finances in the UK, it's likely that the Chancellor will turn out to have cloth ears on this subject. Although the tax is far higher in the UK than in the rest of Europe and the US, that doesn't seem to have damaged the LSE so far.

Abolitionists argue that the move would provide a much-needed boost to the economy, as it would stimulate investment and discourage individuals from trading in foreign rather than UK stocks.

A spokesman for the Association of Private Client Investment Managers and Stockbrokers (Apcims) said: "The Government says that it wants individuals to save for their own future by investing, but we need to know whether this is real or just lip service. Bringing down stamp duty would also give people a helping hand at a time when their confidence has been knocked by events like those at Railtrack."

But the Treasury has heard it all before.

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