LSE boss slams 'unfair' tax system

The private equity industry has come in for a pasting from London Stock Exchange chief executive Clara Furse, who said buy-out groups had a massive advantage over public companies because of the 'unfair' tax system.

'We (public companies) are double taxed on both dividends and stamp duty,' Furse was quoted as saying in the Independent . 'They [private equity] are using debt on which they can write off the tax. There is an unintended policy distortion that the Treasury needs to think deeply about. It suppresses value and there is a massive tax distortion.'

Furse was especially critical about the UK's 0.5% stamp duty on every share trade, which is the highest in the developed world. Furse said this was 'indefensible' and that its abolition was a 'matter of when and not if'.

She also praised the Tories for 'providing leadership' on the issue. Furse was speaking as the LSE reported a 20% increase in revenues to £349.6m for the year ended 31 March 2007.

Despite these complaints officials close to Gordon Brown said there were no plans to abolish stamp duty on share transactions.

Furse and LSE chairman Chris Gibson-Smith told the FT they had discussed scrapping the stamp duty with ministers, but the Treasury denied it was in discussions to scrap stamp duty or that it was in discussions with the exchange to do so.

Further reading:

CBI warns against private equity clampdown

Stamp duty opens up PLCs to private equity takeovers

Private equity seeks new model to cut advisers' fees