I mentioned an attack on the TUC's tax avoidance spoof magazine 'Kerching' by Mayfair lawyer Miles Dean yesterday.
He followed up his attack with an article in Accountancy Age.
Today I got the right to reply, as follows:
"MILES DEAN thinks the Tax Union Congress's (TUC) spoof celebrity magazine Kerching! that highlights tax avoidance is "inflammatory, ill-informed, misleading sabre-rattling" and "tiresome old hat".
That's an interesting range of ad hominem attacks, but the reality is that Dean is well wide of the mark on this issue.
Now I should, of course, declare an interest: I wrote Kerching! for the TUC, and as its author I'll accept that just one of Dean's accusations is accurate: Kerching! is a little on the simplistic side. But then so is Hello!. And, as importantly, so are Dean's assertions.
That's because whilst I can back up all Kerching!'s claims with reasoned tax argument, Dean has no hope of finding economic support for his claim that turning the UK into a tax haven, as he wants, would benefit out economy.
That's because it's impossible to claim, as Dean does, that non-doms who move to the UK are wealth creators as a consequence. They're not. That's firstly because they're only here to dodge their obligations to our society whilst living here at the expense of all the rest of us who have to pay more tax proportionately as a result.
Secondly, it's because by creating more inequality in our society they ring-fence privilege and destroy hope for the majority of people in the UK.
That loss of hope is now really basic; millions of young people won't be able to afford houses because of the distortions in the property market that wealth imbalances - much of it non-dom- and tax avoidance- fuelled - have created.
Perhaps even more important, though, is the fact that tax avoidance in all its forms is massively destructive to business in the UK because it creates an unlevel playing field. So non-dom-owned businesses now have access to cheaper capital in the UK than those owned by domiciled people, putting local people at an inherent disadvantage.
And since some businesses now prosper at the expense of others because of their willingness to abuse tax rules, competition does not now take place on the basis of the value of the service a business supplies to its customers, but on the basis of the ability of the business to cheat and get awaywith it.
Inevitably, honest businesses, those businesses discouraged from investing in the future because they can't beat the short-term, tax-driven speculative gains of their competitors, fair employers and those who add value to communities all suffer and fail as a result of tax avoidance as a consequence.
That's never going to be the basis of wealth creation. That is all about wealth destruction and that's exactly what tax avoidance leads to.
In that case Dean's gain from selling tax avoidance is at cost to society at large, and that's exactly why I and the TUC reject it."
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Richard, please get real.
There are just over 100,000 non-domiciled residents in the UK (and that number is falling fast) out of 30 million taxpayers (0.3% of the taxpaying populations). They pay in aggregate about £6 billion of direct UK tax (i.e. excluding VAT). Put this in perspective: these foreigners, who have cost the UK nothing to educate, who put their kids in (mostly American) private schools, rent homes from British landlords, fly home for healthcare and only cause public disorder through an occasional parking ticket, contribute in direct tax alone the equivalent of about 3 times the median UK wage of £20,000.
Every non-dom pays for 3 civil servants; Over 300,000 more people would be on the dole without them. Non-doms are NOT a problem, they are an asset.
Absolutely and utterly rejected
There may be 7 million non doms in the UK – they just don’t all tell HMRC
And every one of them creates an unlevel playing field in tax and that undermines the entire integrity of our tax system as well as the fabric and justice of our society
I welcome those not bron in the UK to this country
But not on unfair terms
Richard,
Before you reject something, it would be useful if you understood it.
There are 7 million foreign-born residents in the UK, but only a small minority (c. 100,000) have sufficient overseas assets and income so that the domicile rule becomes relevant to their tax affairs. For the vast majority of the others, the domicile rule is irrelevant, because they have no foreign-sourced income to which it can apply. The immense majority of foreign nationals in the UK have only one asset, and it is located between their ears.
The point remains that only 100,000 residents enjoy a differentiated tax treatment under the domicile rule, who as demonstrated by the numbers above already make a massive contribution to UK society, despite have for many of them no interest in it whatsoever.
Simply untrue – many of the rest, I have no doubt, rely on the domicile rule for non-declaration and non-compliance
And you still utterly ignore everything I have said
the last page of Kerching (on the left 3rd para down) says “the ten schemes listed on the right are all obvious examples of tax avoidance”.
unfortunately the right hand side lists such things as:
1. Introduce a new GAAR
2. Stop the current round of HMRC staff cuts
3. Abolish unnecessary tax reliefs
4. engage more actively with international partners
not to be pedantic about it – but none of those are actually examples of tax avoidance schemes are they – they are valid requests for change in law or to put more money into HMRC, but they arent “schemes” are they. Was the last page changed at the last minute and someone forgot to update the left hand side?
Number 5 – which is abolish unnecessary tax reliefs suggests that you/the TUC know what reliefs these are (it mentions film relief, and I would presume that higher rate relief on pension contributions is another) – why not actually list out all the unnecessary tax reliefs, or link to somewhere that does?
I struggle to understand why the TUC wont be more specific about which reliefs it wants changed (maybe it has and I just cant find them, but i have looked)
Respectfully, trying to make a major point out of such a minor issue is clear indication you’re not struggling at all: you’re just seeking to nit pick.
None the less, I’ll put up ten points for you this morning
[…] Some people seem determined to say that the TUC did not name ten tax loopholes it wanted to close in ‘Kerching‘. I think those doing so are sophists, but for the sake of all those who’d like a list of ten tax loopholes I’d close (and I stress, this is my list, not the TUC’s), try these: […]