The London Stock Exchange has published the research as the basis of its annual Budget submission to the chancellor in which it has urged him to abolish stamp duty.
Stamp duty is levied at 0.5% on the purchase of all UK shares.
It said that stamp duty would over time harm the City of London’s competitiveness as;
increasing harmonisation of European markets and investment by sector lead investors to choose non-UK European stocks as substitute investments;
pressure on transactions costs leads investors to seek alternative UK investment opportunities that are not subject to stamp duty;
stamp duty forms a growing proportion of the costs of capital-raising for UK companies; and
its presence could encourage all UK companies with European and global interests to transfer all or part of their share registers to overseas jurisdictions that do not impose share transaction tax.
Gavin Casey, chief executive of the London Stock Exchange, said: ‘Stamp duty’s abolition would make a real contribution to London’s competitive position at a time when pressure on the cost of trading is greater than ever. This historic tax is out of place in today’s internationally competitive environment.’
The research said that the government would be compensated for the abolition of stamp duty by an increase in tax revenues from other sources.
These included a one-off increase in Capital Gains Tax of around £6bn, which would offset the £2.5bn revenue lost.
The government would also get more revenues from corporation and income taxes.
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