By Michael Scott
UK investment banker Lisa Gordon urges higher taxes on crypto purchases to redirect investment towards productive assets within the economy.
Key Highlights
- UK investment banker Lisa Gordon endorses higher taxes for crypto purchases simultaneously with tax cuts on stock investments.
- Gordon proposes lower taxes on the London Stock Exchange (LSE) from current 0.5%
- The 45-year-old population in the UK has crypto ownership and zero equities.
- Stock investment offers critical support to the economy, while digital assets are a non-productive class.
- Listings in the UK stock market declined to 18 companies in 2023, with 88 delisted.d
A leading UK investment banker declared support for hiking taxes targeted at digital asset purchases in an attempt to bolster investment toward the stock market. Lisa Gordon, who chairs the investment bank Cavendish, is convinced that a crypto tax could boost the uptake in the productive asset class to optimize the UK economy.
Increase Tax on Crypto Purchases
Gordon decried the high rate of crypto uptake among the younger Britons, as revealed in The Times’ publication on March 23. The investment banker observed declined stock ownership among the under-45s population, which was over half into crypto investment.
The banker proposes the reduction of the tax burden targeted on the stock purchases in a tradeoff that will see higher tax on the crypto transactions. Gordon endorses cutting stamp duty on equities and applying such to crypto.
The proposal targets reducing the 0.5% tax charged by the UK government on shares listed on the LSE. The tax earns $3.9 billion in annual revenue for the UK government.
Gordon considers the tax reduction could stimulate Britons to invest in the local companies’ shares. The investment shift could inspire more listing on the UK exchanges, triggering a positive cycle for the domestic economy.
Gordon profiles cryptocurrency as a non-productive asset that drains the economy. The comments by the investment banker align with the view that digital assets drain the economic benefits that traditional investments inject.
The Cavendish chair perceives equities as advancing the social contract by providing growth capital that boosts employment, innovation, and more corporation tax revenues. The banker urges support and advocacy for this initiative.
Shifting Crypto Investment
The UK has witnessed growth in crypto ownership, with the Financial Conduct Authority (FCA) indicating that 12% of adults have digital assets holdings. This translates to 7 million adults in the UK owning crypto in November. The FCA data illustrates that a majority of the crypto owners are below 55 years old, accounting for 36% of the country’s digital asset holders.
Gordon warns that more Britons are embracing saving and not investing. She urged a shift to investment that will fund viable retirement.
A previous FCA survey in 2022 illustrated that 70% of UK adults operated savings accounts while 38% owned shares. The report shows nearly three-quarters of 18-24-year-olds lacked investments.
The investment patterns are surprising given that UK policies extend $26,000 in tax-free savings annually. However, only a quarter of the 18-24 year olds and a third of the 25-44 year olds held investments.
The prevailing economic challenges make the situation worse, with the rising cost of living forcing 44% of UK adults to lower or halt saving and investment activities by January 2024. The FCA report shows nearly a quarter of adults utilize savings and proceeds from liquidating investments to meet their day-to-day expenses. The trend lowers the market participation.
Gordon’s criticism of crypto purchases emerges, given her membership to the Capital Markets Industry Taskforce, which is tasked with reviving the financial markets. The actualization of more traditional investment would benefit the Cavendish bank, given its key advisory role to companies eyeing public offerings.
LSE Struggles
Scrutiny into the London stock market by Consulting firm EY shows a quiet spell with only 18 new listings in 2023, down from 23 in 2022.
The report by EY shows 88 entities delisted or transferred to other markets. The investment experts attribute the trend to declining liquidity and lower valuations in the London market,t unlike in the US.
Gordon considers the Us a haven when compared to US markets, where trillions of dollars following recession fears caused by President Donald Trump’s tariff threats.