Press releases 2002
17 June 2002
EXCHANGE SUPPORTS NEW RESEARCH CALLING FOR ABOLITION OF STAMP DUTY
The London Stock Exchange today welcomed research by the Institute for Fiscal Studies (IFS), which puts forward major arguments against the Government's use of stamp duty on share transactions as a source of revenue.
The research underlines the Exchange's case for abolition of stamp duty. It reinforces independent research for the Exchange, which assessed the potential benefits to the Treasury's revenues, and the economy, if a firm commitment to abolishing stamp duty was made. That research found:
- By announcing a commitment to abolish stamp duty in the future, the Treasury could immediately achieve a significant positive impact on the tax-take and the economy in general prior to actually incurring the loss;
- If the Treasury commits to the abolition of stamp duty in four years' time, that alone would have a positive net impact over the first four years of up to 4.5 billion per year; and
- In addition to the direct impact, the tax-take is also likely to benefit from the boost this move would give to the productivity and competitiveness of UK listed companies.
Don Cruickshank, Chairman of the Exchange, commenting on the IFS's findings said:
"You would think that abolition of stamp duty would be central to the Government's investment and productivity agenda. Stamp duty is worse than other taxes because it discriminates against UK companies in favour of foreign companies, and, according to the IFS, makes it more likely that UK firms will be taken over by foreign firms. Could you imagine the United States or France artificially hampering the productivity or investment levels of their own companies? But let's not get sidetracked in debates about what tax is better. What we need is abolition of stamp duty, and an early announcement of their intention would have a hugely beneficial effect on companies' investment, share prices and the value of pensions."
The Exchange will continue to press the Treasury to commit to the abolition of stamp duty.
- ends -
See also the independent research carried out by OXERA on our behalf.