Sympathy for the non-doms is waning

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The backlash against the City’s campaign to keep the domicile rule is mounting.

The Times’ personal finance editor, Andrew Ellson says:

there should be no more concessions to the nondoms. Amid all the hullabaloo about an exodus of half the City to Switzerland, perspective seems to have been lost. The simple fact is that the tax status that nondoms currently enjoy is both unnecessarily generous and unfair to resident taxpayers.

John Moulton of Apax Partners (a venture capitalist, no less) says in the Observer:

Was your dad born outside the UK? If so, you can currently avoid UK capital gains tax for life – and live here. This is madness. People who really live in Britain should pay their fair share of tax. Two hundred thousand people don’t.

Stuart Adam of the Institute for Fiscal Studies has said of the Society of Trust and Estate Practitioners (Step) study that claimed that non-domiciled individuals already pay £7bn a year in taxes, including VAT and council tax, and that half of them were considering leaving the country that the:

methodology is flawed, based as it is on heroic assumptions about what the ‘average’ non-dom’s spending patterns are likely to be.

That’s being kind to it, I think.

Robert Maas, who remains a fan of the domicile rule has much to say about the press campaign to keep it though, all of it critical it seems including:

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.

Andrew Goodall of Lexis Nexis says:

you have to wonder whether “working and middle class” taxpayers will start to ask why they should comply with a tax system that favours a growing number of people purely on the basis of their “domicile of origin”.

His colleague, Mike Truman, the editor of Taxation magazine is more outspoken. Non-doms may create wealth in the UK but so do UK domiciled entrepreneurs, he said in response to the announcement in last October’s pre-budget report, adding:

Why do we want to create a playing field that is tilted against the latter?

He added that the £30,000 charge was “legalised bribery” and a cheap political stunt. I have said much the same thing, without knowing Mike got there first.

And Polly Toynbee has provided a powerful argument in the Guardian, being kind enough to quote me.

Toynbee apart none of these are noted for their political stance. Most are tax professionals. All are saying the claims made are dubious at best and simply unfounded in most cases. Whatever the scenario, equity cannot justify what is happening.

Some like to say I am out on a limb in having promoted change to the domicile rule (and maybe I did play a part in starting this debate; that’s for other’s to decide). What is very obvious is that I am not alone. Very many reasonable people have doubt about what is being said by those who seek to retain the domicile rule.

The battle is not won as a result, but I repeat what I have said before: the tide has turned on this issue. Neither the government or the Conservatives can go back on it. The compromises in the current proposals are painfully apparent now. It is clear there is only one workable option on the table and that is abolition. The zealots will throw their hands up in horror and predict Armageddon: but we should simply ignore them. They have proved themselves wrong far too often to be trusted. They are, after all, the people who by and large brought us the sub-prime crisis. It’s not a good track record.