Sunday, August 27, 2006

Ending Stamp Duty on Shares

Today's Telegraph showed that the Conservatives will cut Stamp duty on shares. It won't win many votes directly, cutting income taxes will do that best. However, its a well-thought through policy for the health of the country that will greatly assist in convincing the public that only the Tories can handle the economy. Here's some of the benefits
  1. It will provide a boost to individual's long term savings in pension funds and life assurance policies . Pension Funds, Life Assurers and ISAs are the largest payers of stamp duty on shares - so the burden most falls on the long term savings of your typical voter. The cut will assist in reducing the long-term savings gap, the biggest structural flaw in the nation's accounts.
  2. This policy will make the UK more competitive on an international basis. The Netherlands has just announced the abolition of its own capital duty.
  3. It removes a market distortion between debt and equity investment. Buying and selling debt carries no stamp duty, selling equities/shares does. There's no logic for this distortion, indeed regulators and rating agencies would normally prefer equity investment
  4. Raising revenue in other forms, not necessary to my mind, would increase economic stability. Revenues from stamp duty on shares are highly volatile, being £4.5bn in 2000-01 and dropping to £2.5bn in 2002-03/2003-04.
  5. Upfront taxes on capital hurt more than taxes on profit. Stamp duty is effectively charged when payments are made into a Pension Fund, which are then used to buy shares. Hence the tax penalises pensions from day one to final receipt of annuity, as it prevents the accretion of return on the amount of stamp duty paid, ab initio
  6. The City, pension funds, banks, life assurers and corporates in general would be liberated from the administrative hassles of stamp duty, and especially Stamp Duty Reserve Tax
  7. It will Fulfill a broken promise of the 1992 Conservatives General Election Manifesto


At 2:32 AM, Anonymous Anonymous said...

What about ending Stamp Duty Land Tax, which treated at least 161,000 of our fellow citizens as tax criminals last tax year (05/06) for late-filing of the incomprehensible Stamp Duty Returns, even for dalys of only a day and even where no tax was payable


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