How the Chancellor isn't 'getting rid of the UK's Financial Transaction Tax'
In the Budget statement yesterday (20 March 2013), the Chancellor George Osborne reiterated how he was turning his back on a share of the £30-35bn a year which would come from a small Financial Transaction Tax. This is while other countries in Europe including France, Germany and Spain, benefit from it.
He also suggested that he was taking a big step in the opposite direction, by abolishing certain stamp duty.
"I also want Britain to be the place where people raise money and invest.
Financial services are about much more than banking. In places like Edinburgh and London, we have a world beating asset management industry.
But they are losing business to other places in Europe. We act now with a package of measures to reverse this decline – and we will abolish the schedule 19 tax which is only payable by UK domiciled funds.
Many medium sized firms and start-ups use the Alternative Investment Market to raise funds to help them grow.
Many observers of the British tax system complain that it has long biased debt financing over equity investment.
So today I am abolishing altogether stamp duty on shares traded on growth markets such as AIM.
In parts of Europe they’re introducing a financial transaction tax.
Here in Britain we’re getting rid of one."
According to the Budget from April 2014 the UK will abolish schedule 19 charges and stop levying stamp duty on AIM shares.
Analysis by David Hillman at Stamp out Poverty is that, in revenue terms, this means a reduction in annual revenue of £145 million in schedule 19 charges and £170 million in AIM fees. A combined total annual reduction of £315 million.
HMRC has stamp duty at £2.794 billion in 2011/12. The £315 million stamp duty cut is equivalent to only 11 per cent of this annual revenue.
As David says: "So rather than "getting rid" of the UK's Financial Transaction Tax in shares, today amounts to reducing revenue from the tax by about 10 per cent. This is of course a move in the wrong direction but to claim this is getting rid of the UK's Financial Transaction Tax is simply not true."
(c) Jonathan Bartley is co-director of Ekklesia.
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