What’s the big deal with STT, the World is not falling as yet.
Regulators and regulated are like husband and wife, you got to live together and the love hate relationship will persist. Wife will prevail in all likelihood and no prizes for guessing who’s playing the wife in the securities traders/ SEBI face off on STT.
Securities Transaction Tax (STT) is a small component of tax on each buy and sells securities transaction in the markets. Traders hate taxes as they too much like other investors wish to capture absolute after tax gains. It’s natural for them to cry hoarse over any new tax proposal. They’ve made a beeline of excuses and hectic lobbying to get STT out of the way in the Direct Tax Code. For the regulators and MOF, STT is just another device to mop up revenue from a profitable transaction. Plus thanks to PC, STT had a very successful dry run in the last two fiscal years.
Traders say STT hurt efficiency in the markets,( sure they should label everything that hurts traders profits as a trigger for market inefficiency ), the regulators and tax authorities say when UK can do it why can’t we. Both have a point, but I feel STT is not so bad after all. Sure it brings down absolute return by a few bips, but if it contributes to the tax kitty without hurting market efficiency traders should not try to fake it.
As responsible citizens (traders and responsible, I must be kidding!) we should stop treating discussions on DTC as a “trumpet” which anyone can blow at will and get away with it. Having studied STT implementation in other international markets, I don’t see it as a monster. Traders should get used to it and let regulators have their way on this one. My suggestion to traders: Bargain hard on things which matter more, think tax credits for capital gains reinvested.
No comments:
Post a Comment