2023-08-17 01:51:56
Recently, there have been increasing calls in the market for proposals to reduce or exempt stamp duty on securities transactions.
Recently, the Chief Executive of the Hong Kong Special Administrative Region, Lee Kar-chao, is accepting public consultation on the second Policy Address of his tenure. The Hong Kong Securities and Futures Professionals Association responded that it requested the cancellation of stamp duty on Hong Kong stocks.
At the same time, a number of brokerage institutions recently stated in research reports that if the stamp duty on securities transactions in the A-share market is lowered, the policy symbolizes great significance and can play a role in activating the stock market, and it can also boost the confidence and enthusiasm of the stock market in the short term.
A number of market analysts interviewed by CNR Capital Eye pointed out that there is indeed a necessity and room for adjusting the stamp duty on securities transactions. On the one hand, the reduction or exemption of stamp duty on securities transactions can obviously play a role in reducing stock market transaction costs and activating the capital market. On the other hand, according to data from the Ministry of Finance, in the past 10 years, the income from stamp duty on securities transactions has accounted for less than 1% of the national fiscal revenue on average, and the reduction or exemption of stamp duty has little negative impact on finances.
So, under the current circumstances, if the stamp duty on securities transactions is adjusted downward, what is the specific range? Analysts believe that it can be halved or canceled directly. But this is related to the balance between fiscal revenue and the capital market, which needs to be considered comprehensively.
What regarding tax cuts?
Since the central government set the tone on July 24 to “activate the capital market and boost investor confidence”, various market players have offered advice and suggestions. Recently, there have been more and more voices suggesting the reduction of stamp duty on securities transactions.
For example, Tebon Securities stated in a recent research report that with the continuous advancement of various policies to “activate the capital market”, the reduction of stamp duty is still a tool that can be launched in a timely manner in the transaction-side policy toolbox, although the effect is concentrated in the short term. Sentiment has been boosted, but the symbolic significance of the policy it brings is greater than the loose significance of the financial side.
Since 1990, the stamp tax on A-share securities transactions has been raised twice and lowered seven times. Currently, the seller is unilaterally charged 1‰.
Ye Xiaojie, director of the finance department of the Shanghai National Accounting Institute, told Yangguang Capital that there is indeed room and necessity to adjust the stamp duty on securities transactions. “In July, the central government proposed to ‘activate the capital market and boost investor confidence’, and lowering the stamp duty rate will help reduce transaction costs for investors and enhance investors’ sense of gain, which is of positive significance for improving market liquidity.” Ye Xiaojie said explain.
“Judging from the effects of previous tax rate adjustments, following the stamp duty is lowered, it will have an immediate effect on boosting market confidence and transaction activity in the short term (generally 1-2 weeks).” Xue Hongyan, vice president of Xingtu Financial Research Institute, told the Central Guang Capital Eye said that investors currently have strong expectations for the reduction of stamp duty. The reduction of stamp duty can conform to market expectations and is expected to significantly improve market sentiment and boost investor confidence.
“Because the stamp duty is collected during the securities transaction, the abolition of the stamp duty can reduce the transaction cost of investors. Although the tax rate is not large and the tax burden is not heavy, the investors will directly benefit from the cancellation, which will enhance the subconsciousness of investors’ transactions. It has a great promotion effect and will increase the trading and activity of the stock market, which is naturally good for the stock market.” Liu Zhigeng, a well-known financial and tax audit expert, told CNR Capital Eye.
Xue Hongyan pointed out that since 2008, the commission rate of securities transactions for investors has been greatly reduced, and the mainstream commission rate has dropped from regarding 1.5 per thousand to regarding 2.5 per thousand, while stamp duty has remained at the level of one thousandth, which has become a major part of the cost of securities transactions. main source. “Currently, it is the general trend to lower the stamp duty to reduce the cost of securities transactions. If it will be lowered sooner or later, the lowering effect will be better at present.” Xue Hongyan said.
“According to past experience, if the stamp duty is adjusted, it may obviously play a role in activating the capital market.” Cheng Qiang, chief macro analyst of CITIC Securities, pointed out in the research report.
After the last four stamp duty cuts, the trading volume of the Shanghai Composite Index rose by 71%, 98%, 114% and 139% respectively in the week. According to the analysis of Galaxy Securities Research Report, this is mainly because the reduction of stamp duty will help reduce the cost of investors, which will help promote the scale of market transactions. “The reduction of stamp duty will boost the capital market and boost the enthusiasm and confidence of the stock market in the short term,” Galaxy Securities said.
“Reducing the stamp duty on securities transactions can activate the market and boost confidence. It will be of great benefit to the securities business sector in the short term, which in turn can drive the index up.” Xu Peng, an associate researcher at the China Academy of Macroeconomic Research, believes that, but at the same time, the stock market Funds may pile up to join the game of the brokerage sector, leading to a “disguised blood draw” on other sectors. Therefore, the so-called market is likely to be a structural market, rather than a general rise in the entire market.
“Actually, the reduction of stamp duty may have limited effect on the long-term healthy growth of the market.” Xu Peng emphasized that compared with the reduction of stamp duty, how to introduce more incremental funds, especially medium and long-term funds, to control excessive financing and reduce holdings It is more important to wait for the ‘blood-sucking phenomenon’ to effectively improve the performance of listed companies and better return investors.
The Debon Securities Research Report also stated that following reviewing the 7 stamp duty rate reductions, it can be found that the tax rate reduction has a certain boosting effect on the market in the short term, but the medium and long-term impact may be limited.
“At present, with the continuous advancement of various policies to ‘active capital market’, we believe that the reduction of stamp duty is still a tool that can be launched in a timely manner in the policy toolbox of the trading side. Although the effect is focused on boosting short-term sentiment, but The symbolic meaning of the policy it brings is greater than the easing meaning of the capital side.” Debon Securities Research Report said.
The CITIC Securities Research Report sorts out from the investment side, financing side, and transaction side, and believes that the following policies may play a role in activating the capital market. The investment side includes introducing medium and long-term funds, expanding opening up to the outside world, reforming the assessment mechanism of public offering funds, and reducing fees for public offering funds. The financing side includes reasonable control of IPO and refinancing speed, increasing the supply of high-quality companies, and overseas listing of platform companies. The trading side includes the reduction of stamp duty on securities transactions, T+0 trading mechanism, etc.
How much is more appropriate?
According to data from the Ministry of Finance, in the first half of 2023, the stamp tax revenue from securities transactions was 110.8 billion yuan, accounting for 1.11% of the tax revenue of 9966.1 billion yuan in the same period, and 0.93% of the fiscal revenue of 11920.3 billion yuan in the same period. It is also worth noting that in the first half of 2023, fiscal revenue increased by 13.3% year-on-year, tax revenue increased by 16.5%, and stamp duty on securities transactions decreased by 30.7% year-on-year.
The timeline has been lengthened. In the last ten years (2013-2022), the proportion of stamp duty revenue from securities transactions to tax revenue was only 1.06%, and the proportion to fiscal revenue was only 0.89%. Even in the bull market year of 2015, the proportion of stamp duty revenue from securities transactions to tax revenue and fiscal revenue was only 2.04% and 1.68%.
“Securities transaction stamp duty revenue does not account for a large proportion of the national fiscal revenue, and the country is not short of this money.” Sun Yudong, a professor at the School of Public Administration of Renmin University of China, told CNR Capital Eyes, “Currently, the fiscal revenue function of securities transaction stamp duty It’s been minuscule.”
On the other hand, in terms of tax fairness, Sun Yudong pointed out: “Stamp tax on securities transactions is not a very fair tax. It has the nature of a turnover tax, that is, no matter whether investors sell stocks at a loss or make money, Taxes must be levied according to the transaction value, ‘the wild goose plucks the feathers’.”
However, no matter whether the stamp duty on securities transactions is reduced or exempted in the future, it will face a legal procedural problem.
The Stamp Duty Law passed on June 10, 2021 and implemented on July 1, 2022 will include stamp duty on securities transactions. Therefore, if tax items or tax rates need to be adjusted, the government can submit a revised draft to the Standing Committee of the National People’s Congress for approval, or the government can revise it with the authorization of the Standing Committee of the National People’s Congress. “Of course, this is an operational issue. The key to the current issue is whether to adjust, not how to adjust.” Sun Yudong said, “In order to encourage investors to participate in transactions, the cancellation or reduction of stamp duty on securities transactions must be a negative impact on the securities market. Good news.”
According to the China Merchants Securities Research Report, looking at the world, many countries and regions in the world have imposed securities transaction taxes, but the major stock exchange markets tend to abolish this tax eventually. This tax was levied, and then several countries stopped levying this tax one following another. Recently, the Hong Kong Securities and Futures Professionals Association also expressed its request to the Hong Kong government to abolish the stamp duty on stock transactions.
Wang Jinbin, deputy dean of the School of Economics at Renmin University of China, told Yangguang Capital Eye: “The adjustment of the trading system to reduce costs is conducive to the activation of the capital market. Of course, the greater the decline, the better the effect.”
“Currently, the stamp duty on securities transactions has become ‘tasteless’, and there is not much room for the current tax rate of 1‰ to be reduced.” Liu Zhigeng suggested that the stamp duty on securities transactions should be abolished directly to give the stock market the most powerful boost.
Xue Hongyan said that the reduction of stamp duty on stock transactions has little impact on national tax revenue, and it is also in line with the policy orientation of tax reduction and fee reduction and profit sharing entities. In view of the fact that the international mainstream securities market has gradually canceled the stamp duty, if the A-share market lowers the stamp duty, it can take a bigger step, such as reducing the stamp duty rate from 1‰ to 0.5‰ at one time, and then depending on the situation in line with international standards, it can gradually cancel the stamp duty rate. Transaction stamp duty. In addition, stamp duty can also be considered as a policy tool to encourage long-term investment, and differentiated stamp duty rates can be imposed for different holding periods.
Xu Peng also pointed out that in recent years, all levels of the central government have been promoting tax reduction and fee reduction, and the stamp duty on securities transactions has continued since the adjustment in 2008. At present, it can try to adjust, and the market has strong expectations for this. “However, it would be impractical to lower the tax rate to zero, because although the annual stamp duty revenue of more than 200 billion yuan in securities transactions does not account for a large proportion of the total fiscal revenue, the absolute value is still considerable,” Xu Peng said. , “It is suggested that the tax rate be lowered from the current one-thousandth to five-thousandths. If the reduction is too small, the market will not see sincerity. If the reduction is too large, it will still have an impact on fiscal revenue.”
“Under the current circumstances, the stamp duty on securities transactions should be adjusted downward. From the perspective of the specific extent, it can be halved or directly cancelled. But this is related to the balance between fiscal revenue and the capital market, which needs to be considered comprehensively.” Ye Xiaojie explain.
(Originally titled: Calls for Reduction and Exemption of Stamp Duty on Securities Transactions are Growing, Analysts Believe That There Is Necessity and Space for Adjustment)
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