The London Stock Exchange today reacted to the failure of the UK government to take the opportunity of the Chancellor of the Exchequer’s pre-budget report to Parliament today to abolish stamp duty on share dealing.
“For 5 years now, the Government has rejected calls from across industry to abolish this antiquated and discriminating tax which adds 80 basis points to UK based companies’ cost of capital and holds back business investment to the tune of 3 billion per annum,” says Don Cruickshank, Chairman of the Exchange. “The Government is running out of time to address what is a serious issue for the UK economy. There is now a broad coalition in place across the corporate sector, pensions industry and the broader financial services industry that believes urgent action should be taken. Even a commitment to phased abolition, or a promise to review, would have been a clear signal to companies and international investors that this is not a cost that they need to account for in their long-term thinking. No other modern economy has such a tax. No other government levies taxes that only its home-based companies suffer. I believe this is going to become an even bigger issue as we move to a single financial market in Europe, as the disincentive to invest in UK stocks created by stamp duty is being brought into sharper relief. Let us hope, for the sake of higher business investment, higher productivity and more jobs, and for the sake of pensioners, that the Government does not leave it too late before acting.”