18 April 2002
CIMA has welcomed the Government consultation on the modernisation of stamp duty on land and buildings in the UK, and urges the Government to also review the arrangements for stamp duty on share trading.
The UK is the only major economy to impose a significant tax on share transactions. In the long term, this may adversely affect London's position as a world-leading financial centre, which is already under pressure from rival markets in Europe and the US. More importantly, it raises the cost of equity capital for UK companies. A lower cost of capital would lead to higher levels of investment, resulting in faster economic growth. The stamp duty puts UK business at an international competitive disadvantage and, over time, it is even possible that some companies may register abroad to avoid the tax being levied on transactions in their shares.
Richard Mallett, CIMA's Director of Technical Development said: 'Scrapping or reducing the stamp duty on share transactions could potentially see a net rise over time in tax receipts to the Treasury, as a result of stock exchange volumes rising and improved economic growth. We were disappointed that the Government chose not to pursue this option in its budget and we now urge that this tax is reviewed and the effect on companies and their shareholders fully considered.'
If you would like more information please contact Lottie Muir
Phone: +44 (0)20 8849 2407
Email: lottie.muir@cimaglobal.com
