For immediate release: Tuesday 5 November 2002

IMA Calls for Tax Incentives for Saving

 Talk by Dick Saunders, Chief Executive, IMA
Investment Management Conference – 5 November 2002

At the Investment Management conference, Richard Saunders, Chief Executive of IMA, today called on the Government to focus on how to stimulate demand for saving, arguing that the proposals in the Sandler Report for a “stakeholder” suite of products would not increase savings:

“The problem with stakeholder products is that they are an attempt to provide a purely supply side solution.  There is nothing there to increase demand for savings products”

He pointed out that investors favoured tax-advantaged housing. That bolstered the case for tax incentives to save in non-housing assets.

“I have just one modest proposal to suggest.  That is to retain the small tax advantage enjoyed by the most successful new savings vehicle of recent times – the tax credit on dividend payments within ISAs.  This is due to expire in 2004, after which basic rate tax payers who do not pay CGT will get no tax benefit from investing in ISAs.  This is something which IMA has put in its budget representations to the Chancellor, and which the Government needs urgently to consider.”

He also criticised the proposal to apply a 1% price cap to “stakeholder” products.

“All experience of price controls is that they defeat their objective… A flat percentage price control discourages providers from entering the lower end of the market, where smaller contributions by investors and fixed distribution costs would make it completely uneconomic.”

He concluded that the fund management industry “… is an industry with a strong future no matter what the short-term problems, an industry that we at IMA believe is worth working hard for.”

The full text of the speech can be found here.

For further information, please contact:

Clare Arber, Head of Communications, IMA, 020 7831 0898
Helen Stephenson, Communications Officer, IMA, 020 7831 0898

65 Kingsway London WC2B 6TD 

Tel: +44 (0) 20 7831 0898 Fax:+44 (0) 20 7831 9975 

www.investmentuk.org 

Investment Management Association is a company limited by guarantee registered in England and Wales Registered number 4343737.  Registered office as above.