Influential: Abraham’s president, Sir Douglas Flint
Removing stamp duty on shares would boost the economy and encourage businesses to invest for growth, one of the city’s most influential figures said this weekend.
Sir Douglas Flint, chairman of fund manager Abrdn and former chairman of HSBC, backed the Mail’s campaign to scrap the tax, which imposes a 0.5 per cent levy on share purchases.
Research shows that investors are keen to put their money into UK shares. Their enthusiasm might increase if duty were eliminated.
More than 12 million savers – almost a quarter of the adult population – say they are likely to buy NatWest shares, according to an Abrdn survey.
The sale of the Government’s stake in the bank was put on hold due to the elections.
More than a third said they would choose the UK market to invest £1,000 in long-term, over any other market.
The London market has come under scrutiny recently after big names such as microchip designer Arm and betting giant Flutter favored a listing in New York over the City.
Flint said removing stamp duty on shares would encourage people to invest in UK shares.
“Savers pay for it,” he told The Mail on Sunday. “It’s value in the machine and it’s not a good idea if you’re trying to foster a culture of stock ownership,” he added.
He cited recent research which showed that scrapping stamp duty would give a big boost to pensions, savings and investment, with little or no overall cost to the taxpayer. The Center for Policy Studies (CPS) found that a typical pension fund would be £6,000 larger if share tax was removed.
It would also boost long-term economic growth by up to 0.7 per cent, while business investment would rise by up to £6.8bn, according to the think tank.
That compares with the £3.2bn stamp duty is expected to raise this year.
The tax is higher in the UK than in any other major financial center and some countries do not impose it at all. The CPS called it “a tax on growth”.
“There are three reasons to abolish stamp duty on shares,” Flint said.
‘First of all, it is a cost that arises from the savings accumulated throughout people’s lives.
‘Secondly, it discourages investment in UK companies. Thirdly, liquidity is good for markets, but if you put a barrier in the form of cost every time you trade, then it is restricted.’
The Conservatives have pledged not to increase stamp duty, but Labor has refused to rule it out.
Last week the Investment Association joined a growing chorus calling on the new government to scrap the tax.
Chris Cummins, AI chief executive, said the move was an “obvious” way to increase the attractiveness of UK stocks.
And in an interview with The Mail on Sunday, London Stock Exchange boss Julia Hoggett vowed to “fight for everything” to attract and keep businesses in the UK. Listing volume in London is improving, she said.
“We are clearly seeing the pipeline starting to be built and (it is) a reason for optimism.”
