Last week, when the Tories put forward the proposal to make non-domiciles pay £25,000 per year to maintain their status. The Chancellor rubbished the idea saying that only about 15,000 would be able to pay as they earned above £62,000 and hitting those that earned less would be horribly unfair.
Today, the Chancellor announced that non-domciles will have to pay £30,000 per year to maintain their status. For the record this is not in anyway horribly unfair, unlike the proposals of those nasty baby-eating Tories.
Is he tripping or something?
21 comments:
Last week his department was saying that US bankers would be driven out of London because the Conservative £25,000 tax wuld not be creditable against US taxes - the Conservatives said that they had taken legal advice that it was.
Presumably he has changed his tune on that point too.
I must admit when I heard that on the radio on the way home this evening I was howling with laughter.
Fantastic stuff. I must watch him speaking to see if he kept a straight face or if his eyebrows did some odd kind of dance.
The problem with this proposal is that it is financially illiterate (both from Osborne and Darling).
The tax advantage for a non-domiciled individual is that they do not have to pay tax on any income generated overseas which they do not remit into the UK. This is not a loophole, it's a deliberate inducement to get some business-minded foreigners to come and live here, in some small way compensating for having to drive on the wrong side of the road, using Imperial measures, and Ken Livingstone.
The Treasury says there are 120,000 non-domiciled individuals in the UK, and that they contribute £4bn in taxes to the UK. Many of them live here for reasons other than the tax advantage, but for many, removing the tax advantage means there's no benefit to living here. Let's conservatively estimate that 30% of them go home as a result.
Now do the maths: assuming that you are a 40% tax-payer, a charge of £30,000 is equal to the tax on £75,000 income. To get that sort of income (and remember, we are not talking about income from employment in the UK - that's taxed here anyway) you would need assets of, what, £1 million kept overseas?
How many of the 120,000 do you think are millionaires? I saw one estimate (in the FT) that said maybe 10,000. But 30% of them have moved so only 7,000 pay the charge, so that raises £210 million. Let's say that the rest of them have overseas incomes of £10,000 on average (most of these people are just office workers), which they now have to pay tax on ('cause they will obviously not opt to pay the charge). So that's £4,000 per head, from 110,000 people, but 33,000 of them have moved, so that's £308 million.
So total revenue from the "non-dom charge" is £210 + £308 million = £518 million. BUT! The 30% who move out used to contribute 30% of £4 billion, so that's a revenue loss of £1,200 million.
These are just foreigners, and they don't even have the vote. So who cares? But perhaps you might like to ask yourself how the chancellor is going to fund the tax take reduction of £682 million....
He should fund it by making efficiency savings, making cuts to those government funded projects which are both unpopular and unnecessary and insisting on value for money in all government contracts that are signed.
I rather think he'll just increase duty on petrol instead.
Sorry Dizzy, but can you point me to where the Chancellor said anything about hitting non doms with a £25,000 fee was unfair?
I had to admit I think you're making that up. Although I am, of course, perfectly willing to be proved wrong.
Read it in papers during conference week after the Treasury analysis said that very few people would be able to afford to pay it unless they were earning above 62K and it would drive people out of the country because it was unfair on their work.
Here you go
According to Darling, a non-domiciled taxpayer would need to receive more than 62,000 stg in foreign income a year 'in order to make it financially worthwhile for them to pay the 25,000 stg charge and remain non-domicile'.
'This would mean, for example, they need foreign capital in excess of 1 mln stg million to give them that amount of foreign investment income,' he said.
The Treasury said 'on best information available', is that just 15,000 of the 114,000 current non-domicile residents have more than 62,000 stg in foreign income.
'Many tens of thousands of current non-domicile workers in the UK are not millionaires but nurses, doctors, junior City workers and other workers who are not highly paid,' Darling said.
I guess if one was being particularly pednatic one could say he never said the word "unfair" but then seeing as I didn't put it in quotes it was obvious I was paraphrsing the implication of his statements slagging the £25K off.
I don't think the quote you've put in bold backs you up. He wasn't saying that the Tory plan was bad because it was unfair on nurses, doctors, junior city workers etc, he was saying that those people weren't earning enough to benefit from nom-dom status if there was a £25,000 charge for it. Those people would therefore, instead, opt into the normal UK tax system. This would further throw out Osbourne's figures (which simply multiplied the number of nom-doms he thought were in the country by £25,000 to get the figure he needed to cut inheritance tax).
Darling never attacked Osbournes plan for being unfair on lower paid non-doms - he attacked them on (among other things) that fact that the existance of those lower paid non-doms threw his simplistic (number of non-doms x £25,000) figures way off. I think your post confuses that.
"I don't think the quote you've put in bold backs you up. He wasn't saying that the Tory plan was bad because it was unfair on nurses, doctors, junior city workers etc, he was saying that those people weren't earning enough to benefit from nom-dom status if there was a £25,000 charge for it."
Riiight.. so its not that it's unfair on them, it's that they couldn;t benefit from the status anymore because they couldn;t afford it, and that doesn;t have, at it;s base, a point about affordability and fairness in demarcation of salary earned compared to tax status, oh no!
Darling was very specifc to invoke the "these people are not millionaires" line and talk about the fabled "key workers" in his attacks. But of course it had nothing to do with trying to make a point about fairness, no, it was all about benefit, and someone not getting a beneift anymore which he didn't consider unfair.
Plus it was all about the flawed figures which are now not flawed at all even though they apply the same principle. Oh no!
:rolleyes:
"Plus it was all about the flawed figures which are now not flawed at all even though they apply the same principle. Oh no!"
Are you saying that you don't think the major Labour attack was on Osbourne's dodgy figures?
I'm not really sure what you mean by all that...? You're original post implies that Labour attacked Osbourne's plans on the basis that they were unfair on low paid non-doms but you've yet to point to anything that backs that up.
You mention the "these people aren't millionaires" quote. But all that proves is that Labour were attacking Osbourne on his idea that ALL non-doms in the UK would pay his £25,000.
It's not rocket science. Osbournes figures were based on:
Number of non-doms in the country x £25,000 = Total needed to cut inheritance tax
When in actual fact, the figures should be:
Number of non-doms in the country MINUS number of non-doms who would leave if a £25,000 charge was levied MINUS the number of non-doms who, if a charge was levied, would enter the normal UK tax system (which would then be the cheaper option = Less than what Osbourne claims he needs to cut Inheritence tax.
And that's leaving aside the Osbourne's total non-dom figure appears to be wildly optimistic in the first place.
"Are you saying that you don't think the major Labour attack was on Osbourne's dodgy figures?"
Diversionary tactic. My post was about Darling drawing a link around affordability ergo fairness. It's fairly clear that my last response to you was sarcastically pointing out that if, as you say, it was all about flawed figures then the proposal made by Darling has just fallen into the same trap. The irony being of course that the Treasury write to George Osbourne and conceded it's "attack" on the figures were based upon unfounded assumptions. But like I say, you;re question is a diversionary tactic away from the point about Darling very clearly trying to draw the argument along the lines of "fairness" to lower paid non-doms.
And that's leaving aside the Osbourne's total non-dom figure appears to be wildly optimistic in the first place.
Says who? The Treasury that then admitted it didn;t actually know?
You keep repeating it, but you've STILL not pointed to an example of where Labour attacked the Tory proposals on the basis of them being unfair on low-paid non-doms.
The best you've come up with is the quote about millionaires. That was actually just something Darling said to illustrate the fact that, under Osbournes plan, common sense would dictate low-earning non-doms would go with the cheaper option and enter the tax system rather than pay the £25,000 - thus throwing off Osbournes simplistic 'Number of UK non-doms multiplied by £25,000' figures.
Come on Dizzy, it's just simple economic incentives. Osbourne's figures need ALL of the UK's non-doms to cough up £25,000. But, by definition, that will not be in the interests of some. Do you think a non-dom who can pay less tax by entering the UK tax system rather than continuing their non-dom status will do so? Of course not
"You keep repeating it, but you've STILL not pointed to an example of where Labour attacked the Tory proposals on the basis of them being unfair on low-paid non-doms."
Actually, its not me repeating it, its you repeating that I have not said something when I have. You're just seemingly ignoring it. Darling chose to start talking about nurses and doctors on the grounds of affordability and that they would not be able to pay unlike milliionaires, ergo it would be unfair to hit them in this way. Brown has just repeated the line of attacks in the Commons as well.
"But, by definition, that will not be in the interests of some."
And arguing that point is not arguing that it is not unfair to their interests? Jesus wept. Try harder.
Do you think a non-dom who can pay less tax by entering the UK tax system rather than continuing their non-dom status will do so? Of course not
Again diversionary. The post was about Darling deliberately invoking what they like to call "key workers" which had a political dimension to make an emotional connection and imply that such a charge was not fair on them. This post noted that he has now changed his mind on that completely and decided instead that they should all be charged £30K instead implying that he's must be on acid to have such fluid opinions.
It's not difficult to understand, and whilst you have said you "disagree" I note you have not actually argued against that point but merely tried to divert along a different line more than once. You did this in the thread on the Bank of England and it's a pretty transparent derailmant strategy. However, simply copying Dr Johnson refutation of Berkley by kicking the stone does not a sound argument make.
Am bored now too. Have work to do.
What on earth is all this "diversionary" stuff? Why would I want to divert? WHO am I trying to divert? I'm really not trying to be a pain Dizzy. I like your blog and you often write interesting stuff. I'm just trying to have a conversation with you.
My point is simple. Labour never, as you imply, attacked Obourne's plans on the basis that the £25,000 charge would be unfair on low earning non-doms. Instead, they attacked Osbourne's plans on the basis that not enough non-doms would pay the £25,000 to fund his Inheritance tax preposals - ergo "the sums don't add up".
It is therefore in no way hypocrital (as you imply) to implement the £30,000 charge because Labour never attacked the concept of a £25,000 charge - they simply attacked Osbourne's assumption that it would raise enough revenue to pay for his IHT cut.
Could you point me towards the "Key Worker" quote. That seems to be the only thing that might imply that Labour DID talk about the unfairness to low earning non-doms.
"What on earth is all this "diversionary" stuff? Why would I want to divert? WHO am I trying to divert?"
I was referring to the diversion of argument, not the diversion of people. You have been asking questions about non-domicle that are irrelevant to the point about the "fairness/unfairness" argument I mentioned.
My point is simple. Labour never, as you imply, attacked Obourne's plans on the basis that the £25,000 charge would be unfair on low earning non-doms.
Oh they did, as well as attacking it for the reasons you gave along with others. As I have said now multiple times, and even you have effectively conceded it in terms of "their interests". Yes the Government claimed the maths were wrong - it then proceeded to admit that it's own figures were unreliable thereby completely undermining the "sums don't add" argument it had made.
At the same time it deliberately invoked a distinction between the lower paid and rich along the lines of public sector workers and they argued - as I already said and you have yourself pointed out - that it was against their interests. The argument had two points of attacks. One was too make an emotional link with the lower paid workforce, and the other was to create the impression that "workers" would be hard-done by by the proposals, ergo it was not in their interests, ergo it was unfair. It seems to me that your beef is that the word "unfair" was not specifcally used, therefore such an implication did not exist. It does not take a genius to read between the lines of a politician statements and see the dog whistle that is being blown though.
It is therefore in no way hypocrital (as you imply) to implement the £30,000 charge because Labour never attacked the concept of a £25,000 charge
What nonsense, Darling claimed it would drive people out of the UK and deter people coming here. He was very much opposed to the concept. So its not an implication that he was hypocritical, it is a statement of fact.
Could you point me towards the "Key Worker" quote.
The "key worker" term was used by me and put in quotes to denote that I was applying the catch-all phrase the Government uses instead of typing "nurses, doctors, etc" all the time. They chose to use nurses and doctors though because it was a neat rhetorical designed to draw attention to it parts of the work froce that would be hit by the proposals in an unjustifable way.
Frankly, the idea that Darling's argument was (a) not about being opposed to a charge, and (b) not designed to make an emotional connection with the workers being hit by the nasty Tories, requires a startling display of naivity or perhaps support for the Labour Party.
Hey, don't underestimate me...I can be can be startlingly naive while simultaneously supporting the Labour party. ;)
Seriously though. I understand that you think that mentioning doctors and nurses was a way of saying Tory plans would hit poor hard-done-by non-doms and that therefore Labour were attacking on that basis. I just don't see it though. I think there's a different explanation for mentioning them as part of the "sums don't add up" argument. Not sure if that's my naivety or your cynicism.
Oh well.
Figuring that GBP62k that is "equiv" to the tax payable anyway on foreign income ignores the fact that the income will likely be subject to tax in the foreign country, thus double taxing it. Rental income from homes left behind is the e.g. that comes to mind.
And where does the 120,000 come from? I suspect that, as there are (allegedly) about 250,000 Aussies, 200,000 Jarpies and 150,000 Kiwis currently living in the UK, there are a lot of people who won’t/don’t claim non-domiciled status and just quietly ignore the requirement to report their home country income...
When I arrived in the UK my passport was stamped with something about not being a burden on taxpayers, but when a few weeks later I started my job, I was paying good margins of tax plus NI. So why the frick should I pay a fee on top of that? Bear in mind I fought and died for the mother country in two world wars (etc). (Wipes spittle from corner of mouth and keyboard). Why kick the non-doms in the genomes? Why can’t the Tories just pull out a list and point to where the current frickers are wasting all the taxpayers’ money and say "THAT's how we'll reduce inheritance tax" It’s pretty easy thing to do: you do it every other day! Imagine what a team of part-time volunteer accountants, auditors, solicitors could do...
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