Labour’s proposed non-dom clampdown already having strong impact
Within a week of Labour leader Ed Miliband announcing plans to scrap the non-domicile tax status should his party be elected next month, a significant number of Britain’s highest taxpayers are planning to exit the country if there is a Labour government.
As I was quoted in The Sun today – where, in typical tabloid style I was referred to as a ‘City bigwig’ – I am flabbergasted at how quickly individuals have reacted to Ed Miliband’s announcement to eradicate non-dom status, and how dangerously naïve Labour are being about this. The reasoning behind Mr Miliband’s scrapping of the 18th century non-dom tax status rule, which permits many of the UK’s wealthiest permanent residents to avoid tax on their global income, he says is because “anything goes for those at the top.”
However, deVere United Kingdom reports that a substantial number of high net worth clients have been in contact since Miliband’s promise, seriously considering a move out of the UK should these plans come into effect. Britain would become a far less attractive place for these individuals should the non-dom tax status be ditched, therefore wealthier people with the resources to move quickly and easily to a more competitive tax jurisdiction will do so.
This would leave the less well-off people of Britain to suffer the most, the people Labour are supposedly standing up for, as there would be reduced tax revenue to go around to fund the overstrained welfare system.
To my mind this shows a complete lack of awareness on Labour’s part of how the real world operates. Not only would this policy repel a large number of high earners out of the country, but it would also discourage international talent from coming to the UK. Both who contribute a great deal in tax revenue.
As The Sun today points out, some tens of thousands of people left the UK in the 70s due to ridiculously high taxes, with one in 10 being some of the most highly qualified people in the country.
Hence in today’s global economy it is crucial that the UK remains competitive in order to remain attractive to wealthy, talented individuals. So as opposed to attacking non-doms with this frankly preposterous policy, I believe the tax burden should be cut for all, helping to keep Britain competitive on an international level without offering privileges to certain individuals.
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