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Labour gets serious on FTT plans

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The Labour Party has relaunched the proposal, first floated in its election manifesto, to expand stamp duty into a broader financial transaction tax. The proposed tax would be applicable to all debt and equity security trades. The stated objectives of the tax, as set out in a paper published earlier this year by Professor Avinash Persaud, are to:

  • raise an additional £4.7bn of annual tax revenue;
  • reduce systemic risk, particularly that posed by high frequency trading;
  • deter ‘excessive churning’ of investments; and
  • increase transparency in markets.

Clifford Chance has issued a briefing on Labour’s announcement, saying it would be ‘complacent in the present political environment to assume that such a tax cannot be introduced’.

Dan Neidle, tax partner at Clifford Chance, commented that ‘stamp duty is a pretty good tax’, which ‘raises significant sums with minimal impact on investors or business’. And stamp duty, he added, ‘is almost impossible to avoid – you can’t escape it by leaving the UK’.

‘The cost will be borne by pension funds, unit trusts and other investors. They’ll suffer a greatly increased tax on UK shares – up from 0.5% to 1.3% or more. Foreign shares will be subject to tax for the first time.’

The inevitable consequence of this ‘Robin Hood tax’, Neidle said, ‘will be a flight from the UK, with obvious consequences for jobs and UK tax revenues’.

Issue: 1363
Categories: News , Stamp taxes