LSE boss slams ‘unfair’ tax system

The private equity industry has come in for a pasting from
London Stock
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
. ‘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

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