The U.K. opposition Labour Party published a report calling for tax breaks for investors who hold stocks for at least one year, arguing that short-term investment damages the economy.
Labour last year asked George Cox, who sits on the board of NYSE Euronext, to suggest ways to encourage investors to take a longer view. The government published its own report on the subject in July by the economist John Kay.
Cox’s ideas, published in London today, propose tapering the tax on capital gains from shares over a decade, changing tax rules to remove the advantages for debt finance, and stopping shareholders who buy shares after a takeover is announced from voting on a bid. It backed Kay’s proposal to abolish the requirement for quarterly reporting by companies.
“Economic growth needs to become an objective, with strategies to achieve it, not a forecast on which all other decisions are dependent,” Cox said in an e-mailed statement. “Only by overcoming short-termism will we grow the U.K. economy and ensure the U.K. can pay its way.”
On pay, Cox suggested at least 30 percent of executive directors’ remuneration should be deferred and based on five-year results. He said as much as half of non-executive director pay could be in shares, delayed for five years or until the individual has left a company’s board.
Ed Balls, Labour’s Treasury spokesman, and Chuka Umunna, the party’s business spokesman, both welcomed the proposals.
Kay, a visiting professor at the London School of Economics, said in his report that investors should act as “stewards” of a small number of selected stocks over a long period, encouraging them to take a deeper interest in the companies.