Azara Blog: Tories want to abolish stamp duty on share trading

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Date published: 2006/08/27

The BBC says:

The Tories have given their first major hint of plans for a tax cut since David Cameron became party leader.

Shadow chancellor George Osborne has told the Sunday Telegraph he wants to look at abolishing stamp duty on share trading, to help boost pensions.

A think tank's pamphlet is set to say such a move would put some £4bn back into the stock market, boosting pension funds, which are major stock owners.

But the Treasury said that would leave a £4bn gap in public finances.

The government abolished tax relief on pension fund trading in 1998.

According to the Sunday Telegraph, the centre-right think tank the Bow Group will say in a pamphlet out next week that cutting stamp duty would add up to £80bn to share values and boost pension funds.

"Of all the damaging things Gordon Brown has done to the economy, the single most destructive has been the attack on personal pensions," Mr Osborne said.

Repairing that damage "has got to be a top priority", he said.

"Sadly, simply reversing the pensions tax he imposed in 1998 wouldn't work, as many final salary schemes have closed.

"We need to look at new ways of repairing the damage and that is why I am particularly keen to look at stamp duty on shares."

Dumb, dumb, dumb. Why should the City of London constantly get all these subsidies courtesy of the rest of the country? Why should share dealing be considered more worthy of tax breaks than buying property (or anything else)? How are the Tories going to make up the finances to cover this tax break?

One of the side effects of removing this tax is that it will encourage people to hold onto shares for less time, which could even introduce certain types of instability in the market. Buy, sell, buy, sell, what the heck, it doesn't cost much any more.

If the Tories want to do one sane thing about stamp duty, they should propose to change the stamp duty rate on buying property from being absolute to being marginal. The current system is idiotic and unfair (courtesy of Gordon Brown).

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