In a bold move to stimulate the UK economy, Lisa Gordon, chair of investment bank Cavendish, has proposed implementing a tax on cryptocurrency purchases. This initiative aims to encourage British citizens to invest in local stocks, which she believes could revitalize the stock market and provide essential growth capital for companies.
Key Takeaways
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Lisa Gordon advocates for a tax on crypto to promote stock market investment.
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Current UK tax on equities is 0.5%, generating significant revenue.
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Over half of under-45s own crypto, with many lacking equity investments.
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The proposal aims to shift savings into productive investments.
The Current Landscape of Crypto and Stocks
Gordon's comments come amid rising concerns about the investment habits of younger generations. According to recent data, over half of individuals under 45 years old own cryptocurrencies, while many do not hold any equities. This trend raises alarms about the long-term financial health of these individuals, as Gordon noted that relying solely on savings is insufficient for a viable retirement.
The UK currently imposes a 0.5% stamp duty on shares listed on the London Stock Exchange, which generates approximately £3 billion ($3.9 billion) annually. Gordon suggests that reducing this tax while applying it to crypto transactions could incentivize more people to invest in local companies, thereby fostering economic growth.
The Economic Argument for Taxing Crypto
Gordon argues that cryptocurrencies are non-productive assets that do not contribute to the economy in the same way equities do. She emphasizes that investing in stocks provides growth capital to companies, which in turn create jobs, innovate, and contribute to tax revenues. This creates a social contract that benefits society as a whole.
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Equities vs. Crypto:
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Equities: Provide growth capital, support job creation, and contribute to tax revenues.
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Crypto: Labeled as non-productive, lacking direct economic benefits.
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The Impact of the Cost of Living Crisis
Recent surveys indicate that the ongoing cost of living crisis has led to a significant decline in investment activities among UK adults. Approximately 44% of adults have either stopped or reduced their saving and investing efforts, with many resorting to using savings or liquidating investments to cover daily expenses. This trend further underscores the need for a shift in investment strategies among younger generations.
The Role of the Capital Markets Industry Taskforce
Gordon is also a member of the Capital Markets Industry Taskforce, which aims to rejuvenate the UK stock market. The taskforce's efforts are crucial, especially as the London stock market experienced one of its quietest years on record, with only 18 companies listing in the previous year. In contrast, 88 companies delisted or transferred from the exchange, citing declining liquidity and lower valuations compared to other markets.
Conclusion
As the UK navigates economic challenges, Gordon's proposal to tax cryptocurrency purchases could serve as a catalyst for increased stock market investment. By encouraging a shift from crypto to equities, the UK could potentially enhance its economic landscape, fostering growth and stability in the long run. The conversation around this proposal is likely to continue as the government prepares for its upcoming budget, which may include broader tax implications for various sectors, including banking and investment.
Sources
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UK should tax crypto buyers to boost stock investing, economy, says banker, Cointelegraph.
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UK banks could face tax hikes in October Budget, TheBanker.com.
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