(Apologies if you have already read the blog below under its previous title "Stamp Duty must go!")
Now this might be a bit of a perennial at this time of year with the budget looming large, but it's about time there was a concerted effort by the City to get rid of this crazy thing called stamp tax for good!
The Government always hides behind the issue of loss of revenue and this year that's more likely than ever. With the financial condition of "UK plc" at its worse for over twenty years, it's hardly likely that the new Chancellor is going to give much away
in tax reductions, but rather we can expect increases all over the place and where it's politically less damaging. However, if the Government were really smart they would look closely at stamp duty and in more depth than in the past. They should consider stamp
tax in a far wider aspect with its negatives regarding how it impacts "UK plc," rather than the more simplistic tax revenue easy pickings.
With MiFID starting a new age of Capital Market restructuring, where order flow and executions can be moved to a burgeoning array of new venues, the UK is going to have to fight much harder than its ever done before to retain its business, let alone attract
any more. Clearly stamp tax is a major obstacle, which the UK has to get over to win international business from our European competitors, who got rid of government taxes years ago and do not have fiduciary impediments. Overall the UK does have many great
advantages to attract business, but why shoot itself in the foot, handicapping itself from competing on a level playing field with the rest of Europe. We must be a bit of a laughing stock in competing markets!
Loss of tax revenue from stamp duty abolition could be recovered from other sources related to profits made by financial services companies, rather than charging the investor. This new financial services tax would be countered by the new business volume
likely from investors, as "UK plc" would become even more attractive.
Now, this might be more of a risk for financial services firms than for the Government, but in a decade where European financial services are undergoing huge changes, with even greater opportunity likely to follow, its one worth taking by both the financial
services companies and the Treasury.
A few years ago I was talking to Tony Banks the now deceased Labour MP, about stamp duty and he maintained the normal political position, but he notably changed his mood when I said that a large number of his constituents worked in the City and relied on
its continuing success. Loss of jobs could mean loss of votes and stamp duty was a threat. He said that he had not thought of stamp tax in those terms and no lobbying has ever been attempted directly at the MPs weak spots. Votes!
Perhaps the City Lobbyists should change tack and go after the individual MPs and make a new effort to get rid of this out-dated crazy tax before it causes long lasting damage to "UK plc"?