TUC supports abolition of the domicile rule

Posted on

The Observer has this morning covered the calculations undertaken by Tax Research LLP into the cost of the UK's domicile rule; work that was sponsored by the TUC. As they note:

TUC leader Brendan Barber has urged Gordon Brown to scrap non-domicile tax laws that allow the super-rich to pay virtually no tax on their fortunes.

Research commissioned by the union and shown exclusively to The Observer shows for the first time what the loophole costs the economy.

As the TUC annual conference gets under way in Brighton, Britain's top union leader will today start a campaign to abolish non-dom laws and tax breaks that allow city tycoons to pay lower rates of tax than office cleaners.

Using Revenue & Customs and Treasury data, and assuming 20 per cent of non-dom claimants would leave Britain if the loophole was scrapped, figures by respected accountant Richard Murphy at Tax Research show that Britain would still be better off by £4.3bn - equivalent to more than a penny off income tax. The TUC believes that the money should be used to fulfil the government pledge of halving child poverty in Britain by 2010.

The TUC says only Ireland and Britain allow the super-rich to avoid tax and that the Prime Minister should adopt similar residency tax laws to those used in much of western Europe and the US.

The Treasury is reluctant to confront the non-dom issue and believes that the rules help to make the Square Mile the most powerful financial centre in the world. But Barber believes that the City would still attract the world's leading financiers if the law was scrapped.

Barber told The Observer: 'There is an increasingly widely felt sense that the super-rich floating free is unacceptable. People talk about the gap between the top and bottom but I'm concerned about the gap between top and the middle. This is not about the politics of envy. It's about the politics of equity.'

I'm delighted the TUC has taken up this issue. And endorse everything Brendan Barber said. Equity matters. And the domicile rule creates inequity at considerable cost to our society. It has to go.

PS for those not sure what the domicile rule is I have a video on the subject here.