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Non-dom departures? So what?
We're all waiting to hear whether Alistair Darling will make any changes to his non-dom policy in tomorrow's Budget, his first.
Perhaps a little mischieviously, I can't help but draw attention to two opinions on non-doms I've read over the past week.
They're interesting because they fly in the face of the great weight of opinion which has bluntly tried to rubbish the chancellor's policy. Many may have threatened to pack their bags and leave these shores over non-dom taxation, but two economists have taken a contradictory view.
First Willem Buiter of the London School of Economics. He writes:
The explosion of indignation that greeted this proposal was deafening and largely bereft of logic other than the financial self-interest of those non-doms who would be adversely affected by the proposal.
Taking no prisoners, he goes on:
The unequal treatment of equals introduced by the creation of the non-dom (resident but non-domiciled for the purpose of income tax and inheritance tax) category undermines respect for the law among the tax paying public at large.
Then there is Martin Wolf, associate editor and chief economist of the FT. He writes of the non-dom complaints:
From long experience, I am deeply sceptical of special interest “the sky is falling” pleading. More fundamentally, I am opposed to this particular pleading because it is subversive of any enduring political compact among citizens. If we take the principle that successful people are too important and too mobile to pay tax to its logical conclusion, political community will collapse.
So while many think the chancellor cack-handed, they don't necessarily think his policy wrong in principle. Not everyone is shouting him down. Wonder if he'll take heart from that when deciding what to say in the Commons on his big day.
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As Non Dom and business owner I thank Alastair Darling for having incentiviced me to leave.
I am leaving this summer
1. I've cut my tax rate from 40% to 20%
2. For the price I had a 1600sqf in London I am now getting a 4000sqf house
3. I've got a great school for the children
which is 33% of the cost of the one we leave in the UK.
4. I can ski 20 weekends a year.
5. The sun shines brightly 2/3rds of the year.
I'm relocating several jobs to the new country. Destroying 4 jobs in the UK. The best is that the people in the new country cost me half the cost of those int he UK!
My departure and the loss of PAYE/NI/VAT is causing a tax shortfall of more than 4 times the non dom fee. Those of you who stay are going to pay for that. It is quite funny.
So long, Adieu, Auf wiederseehn, Goodbye...
Posted by :Gianfranco | March 11, 2008 3:09 PM
Gianfranco,
I think you missed the point Martin Wolf was making about a political compact. You seem to see the issue only in terms of a monetary cost benefit analysis. Surely there is more at stake than that?
Posted by :Gavin Hinks | March 11, 2008 3:18 PM
The Non Dom tax is also the last straw for us, regardless of the of the £60,000 my wife and I will need to pay, on top of the 40%+ income tax we pay on UK income and the high cost of living here. There is also the quality of life that is constantly getting poorer in UK. We are now so over crowded, road, rail, schools, housing, hospitals are all under increasing pressure from the more than one million extra people that have settled here over the last few years.
We will move this year to the far east where the cost of living is low but the standard is very high. The weather is hot and the people are friendly. I love UK and will miss it but this country is over regulated and over taxed, so the £60,000 Non dom tax is the final straw for us.
Posted by :Colin Rodes | March 11, 2008 6:55 PM
Gavin
No. There is no more than cost benefit analysis. I am a businessman.
I am happy to be totally mercenary. For me the considerations are predominantly monetary and quality of life.
London has been great for the last decade
but "been there done that".
My "rat" instinct tells me the UK ship is sinking. As economy worsens, they are going to hit everybody with more direct and indirect taxes. Just watch it.
Time to jump ship.
Kind regards
GF
GF
Posted by :Gianfranco | March 11, 2008 10:55 PM
Gianfranco,
Forgive me for saying this, but I shall use your terms. Martin Wolf's point is that we shouldn't make policy for 'rats', because that is clearly unfair on all the taxpayers unable to negotiate a more preferential rate for themselves because of non-domiciled status and the ability to afford expensive tax advice.
The political compact must be that we contribute according to our means. And if the more mobile are unwilling to participate and therefore leave, Martin Wolf's point, and Willem Buiter's for that matter, would be, why should we worry?
Posted by :Gavin Hinks | March 12, 2008 7:53 AM
Gavin
The idea that people negotiate themselves a more preferential rate because of ability to afford expensive tax advice is a myth. I have planned my move abroad without spending a single pound. I did invest 5 whole days during christmas studying how to exit UK.
Non Dom status is open to everybody. Each of you can leave the UK and become non dom elsewhere. You have exactly the same chances/rights I do.
Now, in order for employers in other countries to want you, you need to be good enough to compete globally and probably speak languages (please don't give me the nonsense of privilege. I started learning English 20 years ago with limited means)
The problem with the political compact idea is that is just a theory. If people want to run the economy on the basis of theories and high minded principles then be my guest.
These always fail in the end.
Posted by :Gianfranco | March 18, 2008 10:40 PM