How stamp duty can distort investment decisions

COMMENT

Most of us are familiar with the irritation of discovering how much tax we have to pay when we book a flight with a low cost airline.

The annoyance is temporary though and, in the end, does not impact on the decision-making process. We know that if we fly on a full service airline we still have to pay it. The only reason we know about the tax is that the actual cost of the airline ticket has fallen so much the tax is now a large component of the total cost. In the same way, the falling costs of money management are now making the tax on investing a much larger and more visible component. It is getting harder for the new range of low cost funds to bury it. The gradual erosion of initial commission and the move from a bi...