IT’S PROBABLY FAR TOO LATE
I’ve been reading a lot in the press over the weekend about the likely effect of the George Osborne/Alistair Darling proposals to hit non-UK domiciled taxpayers. This puzzles me. Not because the strictures and concerns are not justified. My own view is that the proposals are ill-conceived, ill-developed and strongly tinged with xenophobia. No, what puzzles me is why now? George Osborne, the chief architect of this ridiculous scheme, aired his proposal last October. If the press had condemned it then as strongly as they are doing now it is improbable that Alistair Darling would have adopted it – OK he is introducing a slight variant of it, but the main features are all George’s own work. Leaving one’s protests until February, five weeks from budget day, is highly unlikely to persuade the Chancellor to think again as he has run out of time to come up with an alternative. The deafening silence from the press on this issue since November contrasts with its loud protests over the Darling CGT changes which, being made at the appropriate time, undoubtedly induced him to think again and come up with his Entrepreneurs Relief – even if in typical political fashion this has itself been so ill considered that one of the main beneficiaries is likely to be the equity finance industry which Alistair initially portrayed as the wicked tax avoiders that the CGT changes were designed to penalise!
It is interesting to see that the belated interest of the press in non-doms does not address fairness at all. Dalya Allerge in Saturday’s Times bewails the likelihood that “many of the wealthiest individuals, who are some of the most generous philanthropists of the museum world, plan to abandon Britain”. She points out that five of the largest donors at the Tate are non-domiciles. But the fact that UK millionaires are not leading art patrons is hardly a good reason to tailor a tax system to grant special privileges to philanthropic foreigners. It would be far more effective to introduce a targeted relief for art donations.
And Dayla does not even mention the art world’s main concern, that the new rules on remittances mean that even a non-dom who remains in the UK and pays his £30,000 will be heavily penalised if he brings his artworks into Britain, whether to put them on public display, donate them to a public gallery or sell them. The UK is accordingly likely to become an also ran in the art world.
Damian Reece in the Sunday Telegraph is worried that the planned crackdown will hit American workers hardest and drive away City stars who tend to be American. It is unclear why. Someone who earns most of his money in England – and pays tax on it here under the current law – is actually likely to be affected far less than those who live off capital and/or investment income. Will hordes of Americans really give up their UK jobs? The risk is actually not that they will decide to leave but that their employers will move their operations overseas so that Geneva or Chicago will take over London’s role as one of the leading international financial centres.
Mark Kleeman in the same paper tells us that “the super-wealthy Middle Eastern and Russian non-doms won’t flinch. They will move everything, including their tax advisors, offshore and simply become even more ethereal figures, leaving the taxman to grasp at little more than thin air”. Perhaps, but £30,000 p.a. to the super-wealthy is petty cash, they can probably live with the new remittance rules, and they are in the UK because they like living here, so it is hard to see any logical reason for them to leave.
Bruce Anderson in the Sunday Telegraph tried valiantly to distinguish George Osborne’s £25,000 fee (to which he says there were few complaints) from Alistair Darling’s. Most of the rest of us find it impossible to distinguish the two. As it seems to have taken over three months for the press to complain about Darling’s proposals, a lack of complaints about the Osborne proposals in the week or so before they were hijacked by Darling is hardly an indication that non-doms welcomed them. Bruce is however undoubtedly right when he says that “a sensible government will always protect wealth creators and will never be tempted by short-term gains at the cost of longer term losses”. He is undoubtedly wrong in urging Mr Darling to “steal George Osborne’s ideas”. The real problem is that he has already done so!
Almost as hilarious/depressing as last weekend’s strictures is the hearty welcome that the press have in general given to the fairly minor clarifications that HMRC announced during the week. But more of that tomorrow.
Robert Maas
I’ve been reading a lot in the press over the weekend about the likely effect of the George Osborne/Alistair Darling proposals to hit non-UK domiciled taxpayers. This puzzles me. Not because the strictures and concerns are not justified. My own view is that the proposals are ill-conceived, ill-developed and strongly tinged with xenophobia. No, what puzzles me is why now? George Osborne, the chief architect of this ridiculous scheme, aired his proposal last October. If the press had condemned it then as strongly as they are doing now it is improbable that Alistair Darling would have adopted it – OK he is introducing a slight variant of it, but the main features are all George’s own work. Leaving one’s protests until February, five weeks from budget day, is highly unlikely to persuade the Chancellor to think again as he has run out of time to come up with an alternative. The deafening silence from the press on this issue since November contrasts with its loud protests over the Darling CGT changes which, being made at the appropriate time, undoubtedly induced him to think again and come up with his Entrepreneurs Relief – even if in typical political fashion this has itself been so ill considered that one of the main beneficiaries is likely to be the equity finance industry which Alistair initially portrayed as the wicked tax avoiders that the CGT changes were designed to penalise!
It is interesting to see that the belated interest of the press in non-doms does not address fairness at all. Dalya Allerge in Saturday’s Times bewails the likelihood that “many of the wealthiest individuals, who are some of the most generous philanthropists of the museum world, plan to abandon Britain”. She points out that five of the largest donors at the Tate are non-domiciles. But the fact that UK millionaires are not leading art patrons is hardly a good reason to tailor a tax system to grant special privileges to philanthropic foreigners. It would be far more effective to introduce a targeted relief for art donations.
And Dayla does not even mention the art world’s main concern, that the new rules on remittances mean that even a non-dom who remains in the UK and pays his £30,000 will be heavily penalised if he brings his artworks into Britain, whether to put them on public display, donate them to a public gallery or sell them. The UK is accordingly likely to become an also ran in the art world.
Damian Reece in the Sunday Telegraph is worried that the planned crackdown will hit American workers hardest and drive away City stars who tend to be American. It is unclear why. Someone who earns most of his money in England – and pays tax on it here under the current law – is actually likely to be affected far less than those who live off capital and/or investment income. Will hordes of Americans really give up their UK jobs? The risk is actually not that they will decide to leave but that their employers will move their operations overseas so that Geneva or Chicago will take over London’s role as one of the leading international financial centres.
Mark Kleeman in the same paper tells us that “the super-wealthy Middle Eastern and Russian non-doms won’t flinch. They will move everything, including their tax advisors, offshore and simply become even more ethereal figures, leaving the taxman to grasp at little more than thin air”. Perhaps, but £30,000 p.a. to the super-wealthy is petty cash, they can probably live with the new remittance rules, and they are in the UK because they like living here, so it is hard to see any logical reason for them to leave.
Bruce Anderson in the Sunday Telegraph tried valiantly to distinguish George Osborne’s £25,000 fee (to which he says there were few complaints) from Alistair Darling’s. Most of the rest of us find it impossible to distinguish the two. As it seems to have taken over three months for the press to complain about Darling’s proposals, a lack of complaints about the Osborne proposals in the week or so before they were hijacked by Darling is hardly an indication that non-doms welcomed them. Bruce is however undoubtedly right when he says that “a sensible government will always protect wealth creators and will never be tempted by short-term gains at the cost of longer term losses”. He is undoubtedly wrong in urging Mr Darling to “steal George Osborne’s ideas”. The real problem is that he has already done so!
Almost as hilarious/depressing as last weekend’s strictures is the hearty welcome that the press have in general given to the fairly minor clarifications that HMRC announced during the week. But more of that tomorrow.
Robert Maas
posted by CBW at 5:56 am
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