The new Lord Mayor of London has attacked Rachel Reeves over a tax on investment in UK shares, warning it undermines British businesses.
Alastair King of the City of London Corporation urged the Chancellor to scrap or reduce share stamp duty to restore growth, arguing British investors pay more to invest in their own home-listed companies than in US tech giants.
Mr King said: “There is no stamp duty in relation to investing into New York-listed assets. There is stamp duty when investing in London assets. So effectively you’re starting further behind because your costs of investment are increased.”
Investors pay a 0.5pc levy when buying shares. This is forecast to raise £4.2bn for the public coffers in 2024-25.
Economists at JP Morgan have warned that the Chancellor may already be facing a £20bn fiscal hole after disappointing growth and a sell-off in gilts.
Although he acknowledged that money is tight, the Lord Mayor called on Ms Reeves to at least reduce the tax to boost investment and liquidity, adding that the City is crucial to reviving growth.
It would only cost £650m to ditch the tax on shares in smaller, riskier businesses outside the FTSE 100, such as those listed on the AIM junior market, he said.
It comes after Ms Reeves urged regulators to tear “down the regulatory barriers that hold back growth”, ordering Britain’s watchdogs to come up with proposals for reforms.
Mr King said he was “particularly pushing” for the end of stamp duty on shares and an overhaul of Isa tax breaks in conversations over regulatory reform with the Treasury.
Mr King said: “We used to have a really excellent regulatory environment. Markets have moved on, and the regulatory environment has not kept pace. That’s meant effectively the erosion of the stock exchange and complacency in relation to our position.”
The financier has led several investment firms and founded boutique asset manager, Naisbitt King, after previously working as a solicitor for Baker McKenzie.
The City is no longer as “nimble” as it once was, he added.
However, Mr King said that mandating pension funds to invest in British assets is not the solution to the woes of the flailing London stock market.
Turning around the City’s struggles requires accepting times have changed and taking on a more proactive role in promoting it to investors abroad, he said.
The Lord Mayor said: “‘We need to get back into sell mode and start banging on doors again. People no longer come to us in the way that they used to. We must get more used to going to where the customers are.”
