Will the non doms squeak under the Osborne squeeze?
Fraser Nelson 6:53pm
Team Osborne (regular, if anonymous Coffee House visitors) call to take issue with my earlier blog. I am not right to say non doms will pay more than 50% tax rate, they say, because the £100k average annual earning figure does not include offshore earnings. They estimate the de facto tax rate will be much lower. (They don’t specify, but I get the feeling they mean 20% or so)
Previous “what if” studies on milking the non doms, have estimated that 20% would leave after a crackdown. Crucially, Osborne calculates his tax is benign enough that no one will actually do so. Non doms, he says, believe that £25k is a price worth paying for an assurance that the tax man will not hunt down their worldwide income. They assume some will come onshore rather than pay the £25k charge. They also estimate that there are 150,000 non doms, up from 112,000 in 2004/05.
Much rests on whether these figures stack up. Labour can’t moan much – due to the delicious fact that Gordon Brown’s chief fundraiser, Sir Ronald Cohen, is widely believed to be a non dom thus enabling him to dodge Brown’s outrageous taxes while lecturing us on inequality. But over at Tax Research UK, Richard Murphy has done sums suggesting the proposals will lose as much as they will raise.
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John Austin
October 1st, 2007 7:10pm Report this commentIt's not about getting more money. It's about simple justice. Why should these people live off the rest of us? Who pays for their policing, their defence, their use of the roads system? Even if they wouldn't usually use the NHS, you can bet they'll go to Casualty in an ambulance paid for by the rest of us when they have a coronary or a broken leg.
molesworth 1
October 1st, 2007 8:51pm Report this commentsod non-doms, even dizzy_thinks that the burmese are worth a toss. what has your shadow foreign secretary hague (vague..?) got to say about this
Fraser Nelson
October 2nd, 2007 1:10am Report this commentJohn Austin, I couldn't disagree more. They non doms their money honestly, they don't "live off" us. Quite the reverse, in fact. You ask: who pays for their policing roads, etc? They do. The average non dom pays £26,000 a year in tax, paying for their public service provision several times over. So the rest of us are being subsidised by them, and we'll miss them when they go. Which I fear they will under the Tory proposal. The non dom experiment has shown how wealth is created when the tax rate is lower. It's a low tax, high revenue experiment hugely successful for the City which should be rolled out to the rest of the UK.
Tiberius
October 2nd, 2007 10:49am Report this comment£3.5 billion - it's not really a black hole, is it. Brown adds that to his monthly borrowing requirement when he he's overdone it in the client state. But such is the risk that the Tories are perceived as reckless, they have to offer up zero sum tax calcs. There was a US non-dom on the news last night who said she wouldn't flee unless the tax went into six figures.
David Hadley
October 2nd, 2007 1:24pm Report this commentMost persons born outside the UK (unless they have British parents) are non-dom. Also persons born in the UK but with foreign parents can ofen be non-dom.
Thus the vast majority of immigrants cleaning our offices, labouring in our fields and serving our coffee are non-dom. I am therefore surprised to find that there are only 150,000 of them and they generally earn at least £100,000 per annum. I thought the minimum wage they are usually paid is much lower!
Fraser Nelson
October 2nd, 2007 4:09pm Report this commentTiberius, I agree that £3.5bn neednt have come from the City - esp when you consider state spending is £520bn. This will have a marginal effect, but it's one im worried about. I accept no one will care about non doms. David Hadley, 10% of the people in Britain and 30% of London were born outside the UK so I dont think we're talking about the same thing!
David Hadley
October 2nd, 2007 5:50pm Report this commentFraser
Yes and no. I suspect the 150,000 you refer to are those who non-UK domicile but who are UK resident and claim non-domicile status in their tax returns as they have income arising overseas that has not been remitted into the UK and is therefore not taxable (but would be if remitted into the UK or if they were UK domiciled).
However, a large chunk of the 10% of people in Britain that you refer to are actually non-domiciled they have simply not claimed it for tax purposes, either because they have no foreign income, because the foreign income is remitted into the UK and is therefore taxable in any event or in error or fraudualantly.
Thus a flat rate for all foreign domiciles is not very practical. You will need to either bring in a de-mimus income leval to apply it to or tax all foreign income of foreign domiliaries but cap the tax.
DA
January 6th, 2008 12:05am Report this commentI'm an American non-dom, who has been in the UK for about eleven years. My Indefinite Leave to remain clearly says "No access to public funds", and that's fine. I didn't come to England then demand a flat with benefits like the Economic Refugees we're all familiar with. No, I work in banking full time and teach finance part time at a University in London. I pay a hell of a lot more in taxes than I've ever received in terms of value for money. I'm outta here. Give my place on this island to an Economic Refugee who will take far more than he or she will ever contribute. I asked for nothing and you folks are trying to take everything. Well, in the global struggle for talent I've found that other regimes are more welcoming. Due to my wife's (another unwelcome non-dom) MBA programme I can't leave for another eighteen months but I'm restructuring my investments so the UK will realise precisely ZERO incremental revenue from these changes wrt my tax bill. Actually less. I've got 400K (Sterling) sitting on shore that I've moving off ASAP. Like an idiot it's been sitting here and I've been paying tax on it. Go to hell Darling.
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