Tuesday May 15, 2001 Page G-4
Tax, Budget & Accounting
Investment Association Says Stamp Duty
Damaging Britain's Wealth, Urges Repeal
LONDON--The next British government should encourage investment by abolishing the centuries-old "stamp duty," according to a May 8 study by the Association of Private
Client Investment Managers and Stockbrokers.
APCIMS Chief Executive Angela Knight said the paper on Stimulating Savings and Investment for the Next Parliament and Beyond recommended a set of cost-effective measures to
encourage savers and investors over the next few years. "The one which needs the most urgent attention--and a decision about which the leaders of the next parliament must quickly take--is the stamp duty,"
For the past three centuries, the 0.5 percent stamp duty has been levied on share purchases in Great Britain, rounded up to the nearest 5 pounds ($7). For many years the stamp duty
has raised a significant amount of money. Last year the duty brought the United Kingdom's Treasury around 3.7 billion pounds ($5.2 billion). But Knight said that "the next parliament should take the same
attitude to stamp duty as you must take to smoking--it is hard to give up, but it will have to be done or it will seriously damage your health."
The study pointed out that, as cross-border exchanges grow, fund managers and large multinationals may think twice about listing in the United Kingdom. "Why would they want to
be listed in the U.K. when they could move their business to a jurisdiction where no such tax applies?" Knight asked.
She said the United Kingdom may not want to adopt a model similar to France, where the tax is waived for trades below 50,000 francs. In the United Kingdom, this would affect less
than 10 percent of trades and cost the Treasury less than 10 percent of the stamp duty revenues, she said.
Noting that every country with the exception of the Irish Republic has smaller share transaction taxes that the United Kingdom, she said, "The long-term solution must be
abolition. It's our only chance to remain internationally competitive."
Study Urges Other Changes
Beyond repealing the stamp duty, the study set out several priorities for the party that wins the June 7 general election:
reducing tax on savings income for all standard rate taxpayers, radically simplifying the capital gains tax regime;
reforming the pension annuity rules to remove the 75-year age limit on annuity purchase and to permit indefinite drawdown, and
overhauling the taxation of trusts, particularly to allow pensioners and legal minors to reclaim tax dividends.
Text of the study is available on the Internet at http://www.apcims.org on the Internet.
By Patrick Tracey
Copyright © 2001 by The Bureau of National Affairs, Inc., Washington D.C.