The boss of the London Stock Exchange yesterday joined calls for Britain’s ‘pernicious’ stamp duty on share trading to be scrapped amid growing frustration the tax is holding back investment.
Julia Hoggett attacked the levy, which forces investors to pay a 0.5 per cent tax when buying British shares even though they pay nothing if they put money into foreign firms.
‘We shouldn’t be taxing our own investors to invest in our own economy and that is one of the things I think does need to be changed,’ she said. ‘It is much more in people’s sights than it has been for a long time.’
Stamp duty is seen by many as a key factor in holding back Britain’s stock market, after companies such as chip designer Arm and gambling group Flutter chose to switch to New York.
Flutter chief Peter Jackson last week said cutting stamp duty would be a game-changer and make the UK more appealing, while Stephen Bird, boss of asset manager Abrdn, has said the tax is ‘as unpatriotic as it is economically destructive’.
Frustration: LSE boss Julia Hoggett (pictured) has become the latest prominent City figure to take aim at the stamp duty on trading British shares
Hoggett’s comments come amid much soul-searching over the stock market’s failure to attract new companies, while losing others to rival markets.
London has suffered a drought in those wanting to list, while many of those already listed are seen as undervalued and vulnerable to foreign takeovers.
However, signs of life have emerged with the FTSE 100 scaling record highs and speculation building that the likes of fast fashion giant Shein and diamond business De Beers could launch initial public offerings (IPOs) in Britain.
In a speech at a City conference, Hoggett noted that the combined value of London-listed companies was £1.9trillion bigger than the next biggest European exchange.
And she pointed out that the exodus of firm was not a ‘uniquely British phenomenon’, with a similar trend seen in the US.
But Hoggett, who is leading a taskforce to reinvigorate London as a listings venue, acknowledged that ‘our markets have not evolved as well to serve the UK domestic economy and the needs of the remarkable companies we create in the UK as we could have done’.
And she pointed to the ‘pernicious effects of stamp duty’.
‘In this country we charge retail [investors] and pension funds to buy Aston Martin but we don’t charge them to buy Tesla or Porsche,’ she said.
‘That sort of perverse tax structure is now much more in focus. And believe me, I am not letting it out of my sights.’
Hoggett also said the ‘thorny topic’ of executive pay needs addressing, suggesting shareholders trying to rein in big pay packages for chief executives could be damaging the ability to attract top companies.
It can mean firms have to give an explanation, or go on the ‘naughty step’.
She said that since her taskforce raised the issue, remuneration committees that decide how much bosses get had shown ‘far greater willingness… to sit on what I call the naughty step’.
