Irish market needs stamp duty to be stamped out

Interesting to see the current clamour in the City of London for an end to what investors in Britain believe is the penal 0.5 per cent rate of stamp duty on share transactions.

Investors in Britain should consider themselves lucky - if they lived here they would have to pay double the rate of stamp duty and face the unpleasant prospect of no change in the current 1 per cent rate.

Charlie McCreevy has made it pretty clear that he doesn't have much sympathy for the pleas from the Irish Stock Exchange for a reduction in the rate. The upcoming Finance Bill will contain no crumbs of comfort for the exchange and for investors who have to hand over £100 (€127) to the Government for every £10,000 of shares they buy or sell.

It doesn't seem to matter to those who dictate policy that the Irish Stock Exchange - already in poor shape - faces a serious competitive disadvantage in the level of stamp duty on transactions. That £10,000 worth of shares would be subject to £50 stamp duty in the UK, £25 in Paris and zero in the US where the free marketeers rule.

Now, the Irish Stock Exchange can be legitimately accused of not getting its house in order - especially in the painfully slow move towards electronic trading. But it does have a case for at least an easing in the rate of stamp duty if not its abolition in the case of share dealing.

When Peter Bacon produced his report on the future of the market last December, the exchange said it would introduce measures to make the Irish market more attractive for domestic technology companies planning to go public.

Quite frankly, unless stamp duty is removed it is hard to see any of the Irish techies - the one growth sector for new listings - even considering Dublin given the numerous attractions of Nasdaq and the Neuer Markt.

Some might say that as long as there is penal stamp duty on house sales - something that affects a lot more people than stamp duty for fat cats on their share dealings - then the exchange has no case and that McCreevy should stand firm.

But if there is to be even the most remotest prospect of the Irish market surviving, let alone become a vibrant capital market, then stamp duty has to go. Otherwise, investors will take their business where the taxation environment is more benign. For most Irish techie companies that means Nasdaq!