Taxing the hand that feeds
Fraser Nelson 5:29pm
The Tories have issued a document defending their plan to pay for the £3.5bn cost of their inheritance tax cut by taxing non dom. Still, the only source they can cite for their claim there will be 150,000 non doms to tax is Accountancy Age magazine. That's because there is no reliable data: the Tories and the Treasury are fighting each other by stabbing in the dark. No one knows how many non doms there are, how much they earn or how many would skedaddle if asked to give £25k a year to a Tory government. I’m relaxed about funding inheritance tax cuts, though. The state will take £553bn this year – savings can be found elsewhere.
It's a tough topic. But we’re all richer thanks to the phenomenal wealth created, and tax paid, by the City. Yes, some of the salaries make us mortals sick. But if the government is hungry, it should not take a carving knife to the goose which lays the golden eggs. Tolerating zillionaires is the price we pay for having the biggest cash cow in Europe sitting in London subsidising our public expenditure. As I write in The Business today, the City runs on a magic formula which governments of any hue mess with at their peril.
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Comments
Bruce Robertson
October 4th, 2007 7:49pmAh, the "magic formula" which will keep on rising forever...
John
October 4th, 2007 9:18pmYou said it, Bruce Robertson. Faerie gold that disappears at sunrise. Or, to be more prosaic, profits that exist only by sleight of hand with nonsense like CDOs when nobody knows how much is owed by whom. I say, tax them and damn the consequences. Like all these Russian 'businessmen' and Indian steel magnates really are going to live somewhere else. Yeah? So why aren't they there already? Call their bluff.
Fraser Nelson
October 5th, 2007 9:13amJohn, why do you think they're here in the first place? Because they find London is cheaper to stay than the rival European capitals, and New York. My concern is simple: if you levy this tax it will be a net loss to the Exchequer because so many of them will scarper. Richard Murphy, no right-winger he, puts the case rather differently (but with the same conclusion) here. http://www.taxresearch.org.uk/Blog/2007/10/01/osbrones-domcile-numbers-wont-work/
Tim Worstall
October 5th, 2007 11:15amMurphy is also the source of the number that abolishing non-dom status will raise £ 4 billion. Nice to see that his earlier calculations are now being tested to destruction.
Terry
October 5th, 2007 1:03pmACCOUNTANCY AGE IS NOT THE ONLY SOURCE. SEE THIS IN TODAY'S "TIMES". ......Labour’s numbers are nonsensical,” says Mike Warburton, of the City firm Grant Thornton. On the basis that the numbers filing tax returns as non-doms nearly doubled to 112,000 between 2003 and 2005, he finds an estimate of 150,000 to 200,000 for 2007 “entirely reasonable”. More to the point, Warburton believes that at least 120,000 of these will have enough foreign assets to want to protect them by paying the levy rather than UK tax.