In January Ed Balls said that he thought abolishing the domicile rule would cost the UK money.
Now Labour has announced that it is to abolish the rule and Ed thinks that doing so will raise hundreds of millions of not a billion in tax.
Can both statements be true? The answer is very obviously they can be.
In January Ed Balls referred to total abolition of the rule with nothing in its place.
Since then Labour has adopted my idea of a temporary residence rule meaning that people coming here for a period of up to four or so years (maybe spread over five tax years) would not have to pay tax on their worldwide income. This would mean that students, people on secondment and others who have no intention of staying in the UK long term would not be disincentivised from coming here.
Do that and there would be no reason at all why most people currently using the domicile rule to avoid paying tax would need to leave the UK.
So what has Ed Balls done? He's listened to the arguments, been persuaded of the case and in the light of that has seen there is another, better, option available to him which has now been adopted.
What on earth is wrong with a politician who does that?
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Great interview you did on BBC TV this evening – BBC interviewer tried repeatedly to interrupt you finishing your answers. BBC did not repeat your explanation [above] on the main news though.
Thanks
I like that interviewer but was going to have my say!
Richard,
I have spent some time today reviewing and contemplating this situation in regards to Mr. Balls’ comments. On the economic and policy sides of the ledger, your analysis and prescription are completely spot on, there is no question on those fronts. Far be it from me to begin questioning economics from an acknowledged economist such as yourself.
However, on the political side of the ledger, which is vital to the discussion of political situations, I feel Mr. Balls has given us a textbook example of what not to do, if you care about society more than busking for votes. Mr. Balls was clearly intimating that non dom status, a neoliberal anachronism if ever there was one, was off the table in January, of this year. Now, today, Labour is fudging and saying the fine print of Mr. Balls interview in January of this year was actually the meat of his remarks, fair enough, as far as that goes.
What this highlights is a politician not speaking from the heart and rather some poll driven formulaic formula. Any politician who puts society first would call for the end of non dom, case closed. By wiggling around and saying, in effect, “We want to end non dom statuses, but……” a politician is showing their contempt for society and thus civil society. This is vital.
At the end of the day, I say, we are in a hole over Mr. Balls’ crass remarks, in January, of this year, let us put down the shovel, and climb out of the hole.
Labour should adopt your economic policy prescriptions on non doms, not to mention the passport tax, exploring the viability of an exit tax and the whole host of NSDAP inspired work put forth on these pages. That too is, case closed.
I think your characterisation of today’s events respects the media narrative much more than what any of the Eds are saying. The BBC reported Ed Balls as if they had discovered some ‘found footage’ but they were using the Conservatives edited version of the interview. Over the course of the day they changed this to reflect the actual state of affairs, providing the end sentence eventually, but still reported the furore caused by the edit which the BBC itself had a hand in creating. In rhetoric of all kinds the last words often provide the summation or the main point; so when the Conservatives doctored the interview the rhetorical structure was lost. There was no fine print as you say. I’m sorry to say that despite your best efforts you seem to have fallen for the media narrative.
um, Richard, you are being trolled here – the NSDAP is the Nazi Party.
No it is not in this context
I understand it to mean a national system for deposits and payments
Nevertheless, a most unfortunate choice of initials. I don’t know how it is in the UK, but if I google NSDAP here in France, the ONLY responses I get refer to the Nazi party.
Agreed
It is unfortunate
Richard, John Rentoul was unaware Balls had been misrepresented. Sent him your link, but you might wish him to contact him yourself.
That’s wilful failure to note on his part
The mass departure ofthe non-doms might (or might not) puncture an asset bubble.
Who stands to lose?
…And how much of the media do they own?
Richard,
Your solution is similar to the current state of affairs in the USA. It does not deal with the ‘whales’ like Abramovich and Mittal however, and they likely will leave London in droves and close down their offices here. Their mini armies of lawyers and accountants are currently pouring money into start ups, movies, football teams etc. These people are not here for the good service in our restaurants, or the weather, or the straight teeth and lithe bodies of the locals.
It is ‘not thought through’ and furthermore it would be unfair to grab tax from the profits of an indian steel mill for example just because someone has a squiilion pound house in London! Are we asking these people to act like Google and shift their profits around? I thought that was ‘immoral’. Of course this will not actually happen because there are double-taxation treaties all over the place that mean that it won’t really raise a penny; it will drive people away though.
People may move
Entrepreneurs do not live above the shop
They locate business where the skills are and where the money is to be made
That will be in the UK still
That’s the economic fact of this
So you think Abramovich moved to london because “this is where the skills are”? That’s hilarious.
A) Yes
b) He came here because he can’t go back to Russia
c) If he leaves Chelsea won’t
Next?
Once again, terrible reporting by the BBC, who are just parroting the Tory line here. The extraordinary thing is that Ed Miliband seems to be on course (just about!) to become PM despite the total hostility of almost the whole print media and the BBC and Sky as well… if Labour were to win the election next month in the face of this kind of media onslaught it would be unprecedented, but it would also put to bed once and for all the Blairite claim that it’s impossible to win an election unless you have the Tory press onside. And that would be important for Labour’s (potential) future radicalism.
Why can’t Abramovich go back to Russia? I thought he was well in with Putin after being a government representative in Siberia for so long. I agree that Chelsea will stay but without his millions, they will probably go back to being a mid table Premier League club.
Precisely. He also bankrolled CSKA Moscow and the Russian national team for years, but Chelsea is just the tip of the iceberg for him in the uk and he is just one of many… and they will go. (to be fair, Abramovich has been easing his was out for a while now and has already wound up his main investment vehicle “millhouse” – which was. huge – and moved it to Moscow… (Perhaps he was following Margaret Hodge’s edict to google and Starbucks that ‘taxes should be paid where the money is earned’.) He still invests here though, (75mio in truphone recently).
I’m not arguing that this policy is totally flawed, but I do think it should at least be thought through and not based on the idea that people will just stay because they have no choice… and I’m STILL not clear how it would be ‘fair’ to pay for more NHS beds (for example) with taxes that are raised on a russian coal mine.
No one will use tax from a Russian coalmine to pay for the NHS
Unless it is remitted via a dividend to a UK resident owner
Which is the rule that applies to 99.9% of people in the UK now
Why do you want a separate rule for the very rich?
Why can’t they pay for the NHS they are dependent upon as everyone else if they live in the UK?
Are you suggesting Putin is dependent on the NHS for medical care?
Chelsea are much bigger than one man. The fans and the club will remain, and the money the premier now generates will see them self sufficient.
Chelsea is making a loss. Someone needs to fund that.
That’s wrong richard. Under the (vaguely) proposed change, If the russian coal mine pays a dividend it would NOT have to be remitted to the UK to be taxed here. If you want to support this that’s fine, but you should make the effort to at least try to understand what you are supporting. The fact that you think that Abramovich lives here “because he can’t go back to Russia” does not fill me with confidence.
To be clear, I think that high net worth non dom individuals should pay tax in full on every penny they earn in the UK (this is what non dom COMPANIES have recently been asked to do). Do you think google should declare its worldwide revenue in the UK?
The change is that everyone in the UK will be taxed in exactly the same way
That is the beginning and end of it
Stop making up other arguments
What is your problem with my argument?