Influential: Abrdn chairman Sir Douglas Flint
Axing stamp duty on shares would boost the economy and encourage companies to invest for growth, one of the City’s most influential figures said this weekend.
Sir Douglas Flint, chairman of fund manager Abrdn and a former chairman of HSBC, backed the Mail’s campaign to scrap the tax, which slaps a 0.5 per cent levy on share purchases.
Research shows investors are keen to put their money into UK shares. Their enthusiasm could grow if the duty were scrapped.
More than 12 million savers – nearly a quarter of the adult population – say they are likely to buy shares in NatWest, according to a survey by Abrdn.
The sale of the Government’s stake in the bank has been put on hold because of the election.
More than a third said they would choose the UK market to invest £1,000 for the long term, ahead of any other market.
The London market has come under scrutiny recently after major companies such as microchip designer Arm and betting giant Flutter favoured a New York listing over the City.
Flint said scrapping stamp duty on shares would motivate people to invest in UK shares.
‘Savers pay for it,’ he told The Mail on Sunday. ‘It is grit in the machine and not a good idea if you are trying to encourage a culture of share ownership,’ he added.
He cited recent research which showed that scrapping stamp duty would give a big uplift to pensions, savings and investment – at little or no overall cost to the taxpayer. The Centre for Policy Studies (CPS) found that a typical pension pot would be £6,000 bigger if the shares tax was scrapped.
It would also lift long-term economic growth by up to 0.7 per cent, while business investment would jump by up £6.8 billion, the think-tank found.
That compares with the £3.2 billion that stamp duty is expected to raise this year.
The tax is higher in the UK than any other major financial centre and some countries do not impose it at all. The CPS dubbed it ‘a tax on growth.’
‘There are three reasons to abolish stamp duty on shares,’ Flint said.
‘First, it is a cost that comes out of people’s accumulated life savings.
‘Second, it is a disincentive to invest in UK companies. Third, liquidity is good for markets but if you put in place a barrier in the form of a cost every time you deal, then you restrict it.’
The Tories have pledged not to raise stamp duty, but Labour has refused to rule it out.
Last week, the Investment Association joined a growing chorus calling on the new government to axe the tax.
Chris Cummins, chief executive of the IA said the move was an ‘obvious’ way to boost the attractiveness of UK equities.
And in an interview with The Mail on Sunday, London Stock Exchange boss Julia Hoggett vowed to ‘fight for everything’ to lure and keep companies in the UK. The volume of listings in London is improving, she said.
‘We are absolutely seeing that pipeline start to build and [it’s a] cause for optimism.’
