Xinhua News Agency, Beijing, August 28. Title: Halving the Stamp Duty on Securities Transactions Sends a Clear and Positive Policy Signal
Xinhua News Agency reporters Liu Hui, Shen Cheng, Yao Junfang
The Ministry of Finance and the State Tax Administration announced on the 27th that in order to boost the capital market and increase investor confidence, starting from August 28, 2023, the stamp duty on securities transactions will be halved. Stamp duty on securities transactions, which worries all parties, portends a correction.
Industry insiders pointed out that the Politburo meeting of the Central Committee of the Communist Party of China held on July 24 clearly stated that “the capital market should be active and investor confidence should be raised” and the tone of capital should be raised. The market was more positive and the direction was clearer. The reduction in the stamp duty on securities transactions this time fully reflects the central government’s firm stance towards an active capital market and its confidence in the stock market, and sent a clear and positive political signal.
Reducing the stamp duty rate on securities transactions stimulates the market
Previous reductions in stamp duty rates on securities transactions have stimulated the capital market, and these tax rate cuts have also boosted market sentiment significantly. As of the close on the 28th, individual stocks rose more and fell less, and the turnover of the Shanghai and Shenzhen stock markets exceeded 1.1 trillion yuan. Shanghai index was 3098.64 points, up 1.13%, Shenzhen Component index reported 10233.15 points, up 1.01%, ChiNext index reported 2060.04 points, up 0.96%.
The data show that in 2022, the income from stamp duty on securities transactions in my country will reach 275.9 billion yuan. In the first seven months of this year, stamp duty revenue from securities transactions reached 128 billion yuan. He Daixin, director of the Financial Research Division of the Institute of Financial and Economic Strategy of the Chinese Academy of Social Sciences, said that in the current situation of high pressure on budget revenues and spending, the introduction of this policy is an obvious signal to use a “decrease” in budget revenues in exchange for » market viability.
He Daixin said that based on previous adjustments, the reduction in the stamp duty rate for securities transactions cannot be ignored when the financial market, especially the securities market, is revitalized. In the current difficult economic situation and the new conditions for the development of the securities market, the reduction in tax rates will not only significantly reduce transaction costs, but will also play a very positive role in strengthening confidence in the securities market.
Reduce market transaction costs and bring more liquidity to the market.
The halving of the stamp duty on securities transactions is an important tax policy tool to reduce the cost of securities transactions and increase the activity of securities transactions. The reduction in the tax rate is 50%, and the political effect of reducing the tax burden for most investors is direct and inclusive. This will help increase investor willingness to trade and release more liquidity into the market.
There are more than 220 million individual investors in the stock market of my country, which is 99.76% of the investors of the entire market. Among them, investors holding less than 100,000 yuan and between 100,000 and 500,000 yuan account for 87.87% and 8.12%, respectively. Zhao Xijun, co-director of the China Capital Market Research Institute, Renmin University of China, believes that reducing the stamp duty on securities transactions will benefit most small and medium-sized investors through tax cuts and profit-sharing policies, and will allow the focus on tax inclusiveness to be more fully reflected. in a capital market dominated by small and medium-sized investors.
Zhao Xijun said that the adjustment of the stamp duty policy on securities transactions is a very effective benefit for investors and a significant benefit for the securities market. The reduction in the stamp duty rate for securities transactions helps to reduce market transaction costs and reduce the burden on investors. It reflects a policy focus on lowering taxes, lowering fees, sharing profits, and benefiting people. This will have a significant effect. to activate the capital market and increase investor confidence.
“Three Arrows” of Regulatory Policy Boost Market Confidence
It is worth noting that after the announcement of the policy to halve the stamp duty on securities transactions, the China Securities Regulatory Commission also issued three consecutive policy measures on the evening of the 27th, continuing to send positive political signals to the market.
According to Zhao Xijun, the CSRC’s “shoot three arrows together” policy is in line with the recent attention and attractiveness of the market. Whether it is “IPO optimization and refinancing of regulatory mechanisms”, “further regulation of equity reduction behavior”, or “reduction of stock exchange financing margin ratio”, it will contribute to a more efficient investment and financing cycle and bring more confidence to the market.
After the Politburo meeting of the Central Committee of the Communist Party of China on July 24 clearly stated that “the capital market must be activated to enhance investor confidence”, regulators have consistently taken a number of policy measures, including optimizing refinancing interest rates and lowering the settlement reserve ratio, the reduction of securities trading fees, etc. On August 18, the China Securities Regulatory Commission clearly implemented the policy package for this important decision-making process, responding to market concerns.
The “three arrows” of regulators continue to respond to market concerns about active capital market policies, which will play a key role in stabilizing market confidence. The capital market is worth looking forward to,” said Hu Xiang, chief financial industry analyst at Soochow Securities.
(Responsible editor: Xu Kong)