Brokerage fees slashed

The ASX expects the move to have a significant and positive impact on the Australian financial services industry and the broader economy, reducing the cost of share trading and thereby making the market more accessible and liquid.

Stamp duty is the tax paid on all sales and purchases of marketable securities, which includes share in companies, units in trusts, warrants, instalment receipts and options that are listed and traded on a recognised exchange.

The first real move towards removing the tax was in a decision by the Queensland Government in 1995 to halve stamp duty to 0.15 per cent. This was quickly mirrored by other states. More recently, the Commonwealth Government decided to include stamp duty in its basket of state taxes to be abolished under its program of tax reform.

"It is important to note that this historic change will benefit all Australians - not just the millions who are already involved in the stockmarket," ASX chief executive officer and managing director Mr Richard Humphry said.

"As a result of this, the level of overall activity in the market is likely to increase over time, generating greater liquidity and thereby reducing the cost of capital to Australian companies. Lower capital costs can help Australian companies remain listed on the Australian market. This in turn should have a direct effect on economic growth and activity, employment levels and, ultimately, the living standards of all Australians."

"All governments - federal, state and territory - are to be congratulated for this sensible and responsible development. It follows and complements other recent changes to the taxation system, in particular the effective halving of capital gains tax, which will boost the Australian market's ability to thrive in a global competitive environment."

Australia's abolition of stamp duty matches the taxation regime of the United States and New Zealand, and compares very favourably with that of Singapore (0.2%), Taiwan (0.33%), Hong Kong (2.2%) and the United Kingdom (0.5%).

To illustrate the benefit of the abolition of stamp duty, the ASX gives the example that an investor trading a $10,000 parcel of shares through a non-advice discount broker will probably face only half the cost for executing the trade.

A continued trend towards lower cost and easier trading is beneficial to shareholders' investment strategies, helping prevent investors' exposure to the risk of short-term downturns.

"Making trading cheaper will encourage investors to spread their risk while still being able to take advantage of upturns in particular asset classes or sectors. ASX believes that prudent diversification, together with investing for the longer term and seeking good advice, are the cornerstone to a sensible and successful investment strategy. The abolition of stamp duty can only benefit that goal," Mr Humphry said.

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