The new Mayor of London has attacked Rachel Reeves over a UK share investment tax, warning it would harm British businesses.
Alastair King of the City of London Corporation urged the chancellor to abolish or reduce stamp duty on shares to restore growth, arguing that it costs British investors more to invest in the country's listed companies than to invest in US technology giants.
Mr King said: "There is no stamp duty on investing in New York listed assets. There is stamp duty on investing in London assets. So, in effect, you start to fall behind because the cost of your investment increases."
Investors pay a 0.5% tax when purchasing shares. It is expected to raise £4.2 billion for the public finances in 2024-25.
Economists at JPMorgan have warned that the UK chancellor may already be facing a £20bn fiscal gap after disappointing economic growth and a sell-off in UK government bonds.
While the mayor acknowledged that money is tight, he called on Ms Reeves to at least reduce taxes to promote investment and liquidity, adding that the city was crucial to rekindling economic growth.
He said it would only cost £650m to remove the tax on shares outside the FTSE 100 index.
Earlier, Ms Reeves urged regulators to "tear down regulatory barriers to economic growth" and ordered UK regulators to propose reforms.
King said he was "particularly pushing" for the scrapping of stamp duty on shares and an overhaul of Isa tax breaks in talks with the Treasury over regulatory reform.
Mr King said: "We used to have a very good regulatory environment. The market was developing but the regulatory environment was not keeping up. What this actually meant was an erosion of stock exchanges and complacency about our position."
The financier previously worked as a lawyer at Baker McKenzie before heading up a number of investment firms and founding boutique asset manager Naisbitt King.
He added that the city is no longer as "nimble" as it once was.
However, King said forcing pension funds to invest in British assets would not solve the problem of London's volatile stock market.
He said turning around the City's woes required accepting that times had changed and taking a more proactive role in marketing the City to overseas investors.
"'We need to get back into sales mode and start knocking on doors again. People are not coming to us like they used to. We have to get more used to going to where our customers are," the mayor said.
Mr King said public perception of the City also needed to change to help restore its former status.
He said: "Public discourse about the city is either a bunch of fat cats with their hands in the trough, or the city is a tumbleweed blowing in the streets. It can't be one or the other. At the same time. This culturally mixed message is not helping.”
The London Stock Exchange has suffered a series of high-profile snubs and exits over the past few years, including from the likes of building materials group CRH, gaming giant Flutter and microchip designer Arm.
The latest blow comes after industrial equipment rental giant Ashtead last month said it planned to move its main stock market to the United States. Mr. King highlighted the company as an example to illustrate the urgency of reforming stock stamp duty.
"When they move, it will be cheaper for British investors to invest in Ashstead as a New York-based company than it is to invest in Ashstead as a British company," he said.
Mr King, who was sworn in as the 696th mayor in November, also criticized Issa's tax relief policy as "bizarre".
He warned that allowing savers to deposit £20,000 a year in cash or foreign shares tax-free "makes no sense".
Mr King said: "Why are we giving tax breaks to people to preserve cash? That's weird. You're giving tax breaks to people who want to take risks with their capital."
He noted that Isas holds about £250 billion worth of shares, about half of which is invested in global equities.
"We are effectively subsidizing the cost of capital for large American technology companies," he said.
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