4 reasons Miliband's pledge to end non-dom tax status is a BAD idea

So Ed Miliband is set to announce that a non-dom status is a symbol of tax avoidance that “makes Britain an offshore tax haven”.

He’s going to say that a Labour government would abolish the non-domicile rule that allows some wealthy UK residents to limit the tax paid on earnings outside the country.

As expected, Miliband is drawing a lot of criticism for his move.

The Tories lashed out at the Labour Party by making an infographic showing Ed Balls contradicting himself on the non-dom issue.

Chancellor George Osborne: “Labour is just tinkering around the edges”

“The small print of Labour’s policy makes clear that they are not actually abolishing non-dom status. Either they are going to abolish non-dom status altogether which would cost our country hundreds of millions of pounds in lost tax revenues and lost investment – the reason they did nothing on this during 13 years in office. Or they are just tinkering around the edges and making small adjustments to the rules on how long people can be non-dom.”

London Mayor Boris Johnson: “Miliband’s non-dom policy is anti-business”

 

Dan Wagner, CEO of Powa Technologies: “We’ll lose heavyweight international investors”

“It is imperative that everyone pays a fair level of tax for each jurisdiction they operate in. The UK enjoys a prestigious status as a hub for the world’s heavyweight international investors and business leaders. Abolishing the current non-dom tax limits would risk many of these individuals taking their business elsewhere, cutting off a flow of finance that could far outstrip the additional tax revenues. The UK needs to retain its appeal as a pro-enterprise and business economy.”

Simon Walker, director general of the Institute of Directors, said: “This is a shrewd political move”

“Attacking non-doms is a shrewd political move, but the economics of the proposed reforms are unconvincing. It’s very unclear what additional revenue would be raised, but the UK’s international reputation would be put at risk. This country has benefited enormously from attracting some of the most successful businesses and entrepreneurs in the world, with the previous Labour government recognising the benefits of an internationally competitive tax system.

“While there may be little public sympathy for those who stand to be affected by reforms to non-dom status, the truth is that these things matter. There is a serious risk that large numbers of the international financial community, who have headquartered themselves in London at least in part because of our tax regime, will now exit the country. Politicians at the height of an election campaign may consider this a price worth paying, but we do not.”

Natalie Bennett, leader of the Green Party, said: “Will Miliband back the removal of the so-called Mayfair loophole?”

“The planned Labour changes to  non-dom status can’t come a moment too soon but this change alone is only one small step in tackling the epidemic of tax dodging that has damaged goverrnment revenue and meant the richest don’t pay their fair share.

“We’d introduce a tax dodging bill in the first 100 days of the parliament, and we’d levy a wealth tax to ensure that assets as well as income are considered when redistributing resources.

“The last four decades have seen wealth accumulate at the top of society while those at the bottom struggle to get by. We need bold policies to ensure that inequality, which even organisations like the IMF and the World Bank identify as an economic threat, is tackled.”

Bennett added a challenge to the Labour Party:”Will you back the removal of the so-called Mayfair loophole, which allows private equity bosses to dodge up to £700 million a year?”

 

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Readers' comments (3)

  • Michael Smith

    Another example of the Tories looking after their own whilst the rest of us, who don't have clever accountants and overseas businesses, pay every penny due. No other civilised country does this. The class system at it's worst.

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  • Anonymous

    We were warned by 'City Experts' a few years ago that non-doms would leave Britain and move to tax haven bliss in Switzerland or The Bahamas. The reality was actually completely different; there are now more non-dom parasites here than ever before! If they want to go then good riddance but if they stay then the same taxes must be paid as the rest of the community.

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  • Anonymous

    The non-dom status specifically encourages non-doms NOT to bring money into the UK - in which case it would be taxed. Logically, wouldn't non-doms even move UK-earned income abroad, where income/interest would be tax free?

    Much better to tax these people equally to normal residents. If they want to go somewhere like Monaco - good riddance. They'll be replaced in their jobs by someone who contributes to the system like the rest of us.

    Getting rid of non-dom status will end up being a net gain for the UK.

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