The City minister doubled down on the Treasury’s contentious tax on share trading yesterday after a group of the UK’s top fintech firms called for the charge to be dropped.
Speaking with City A.M. at the Innovate Finance Global Summit yesterday, the Economic Secretary to the Treasury, Bim Afolami, said ditching the charge was not a priority for the government despite mounting anger in the City over recent months.
“Look, I want all taxes gone. I’ve heard it from many people in the City over the last year or so and the Chancellor is very clear that he keeps all taxes under review,” Afolami said.
“But that is not our immediate focus at the moment – it’s making sure we get the regulatory changes through, making sure the broader environment is correct, making sure the incentives are right to grow, not just to grow these companies but our stock markets as well.”
The comments come after a group of the UK’s top fintechs called for the charge to be abolished as part of a package of reforms to boost the appeal of London’s markets to growth technology firms.
Among a list of policy asks revealed exclusively by City A.M. on Monday, the Unicorn Council for UK Fintech, made up of firms including Revolut, Monzo, PrimaryBid and Zilch suggested the tax was penalising investors in the UK market.
However, Afolami’s comments suggest the brouhaha over the charge is unlikely to subside.
Scores of City groups and listed firms voiced concern in recent months, warning that it was blocking cash from flowing into the market.
At its current rate, any investor buying a share in a UK incorporated company would be hit with a 0.5 per cent charge on the value of the stock. Most international rivals do not have a similar tax and where they do it is levied at a much lower level. At its current rate, the tax brings in about £3.3bn to the Treasury.
In a statement this weekend, the Treasury said stamp duty on shares was a revenue raiser that allowed the Treasury to invest in public services.
The intervention from some of the UK’s top IPO prospects is likely to serve as a warning shot to UK regulators and policy makers as they launch a reform package designed to lift the appeal of the London Stock Exchange.
The market has been in the doldrums for the past two years amid an exodus of cash and a dearth of new listings. Just 23 new firms floated in London last year while more than 150 firms left the London Stock Exchange’s two markets.