Tax Research UK

Lords vote to get tough on political donations from non-residents | Politics | guardian.co.uk .

Peers last night voted to ban non-residents and so called “non-doms” from donating to political parties, in defiance of the Labour and Conservative frontbenches.

A backbench Labour amendment, designed to force the Tory donor Lord Ashcroft to clarify his tax affairs, was passed by 107 votes to 85, a majority of 22.

The amendment to the political parties and elections bill, tabled by the former Labour MP Lord Campbell-Savours, was based on an amendment which was blocked from debate in the Commons. The vote last night means that MPs will be given a chance to debate and vote on the issue.

Quite right.

No representation without taxation.

Richard Murphy Domicile

And non-doms say tax is a bad thing. Or, as a KPMG survey reports, non-doms have revealed the extent of their dissatisfaction over being charged tax. Apparently:

• One in four non-doms set to quit the UK
• More than 90 percent say tax changes damaged the UK’s competitiveness

Now let’s deconstruct that. First, as a matter of fact all non-doms are required to quit Britain. If not they’re domiciled. So the rules appear to have brought 75% within the UK tax net. Great!

Second, who the heck are the people who think they have a  right to define our competiveness in terms of their non-tax payment?

I have a response to this: it’s undiluted drivel.

Richard Murphy Domicile, KPMG

The Economic Times of India has reported:

Voters in the region of Zurich, the home of Swiss banking, sprang a surprise on Sunday by deciding to abolish tax breaks for rich

foreigners living there, including show business and sports stars.

Some 52.9 percent of voters — more than 216,000 people — backed an initiative launched by the left-wing Alternative List to abolish “tax privileges for foreign millionaires” in the canton.

The UK failed to get rid of its domicile rule. But even some of the Swiss can.

Surely it’s time we did the same, once and for all?

Richard Murphy Domicile

I’m writing on residence and domicile at TaxationWeb:

In my opinion, the approach you adopt to the question of residence and domicile is a bit like the proverbial Marmite question. It creates clear and unambiguous divides between those involved in the debate.

You may not be surprised to hear that I suspect I’m not on the same side as our professional institutes.

Richard Murphy Domicile

Do you remember the domicile debate and how almost all accountants argued that we had to keep our favourable tax treatment so that all those bankers, private equity operators and hedge fund managers would stay in the UK to create wealth for us?

Don’t you just wish that we had abolished the rule? Don’t you just wish that those bankers and their friends had all fled, taking their accountants with them?

Think how much better off we would be today if we had won that debate.

One can only hang one’s head in sorrow at the cost The accountancy profession has imposed upon our country.

Richard Murphy Domicile

The TUC has published a briefing revealing that inequality is just as damaging to children as poverty, and harms their health, education and well-being. As it says:

Poverty and inequality and children finds that, while the UK has had some success in reducing the level of poverty over the last decade, progress on social inequality has been much more muted. Over the last 30 years inequality has grown rapidly in the UK, and the gap between the top tenth of the population and the bottom tenth has doubled since 1979.

Inequality in the UK has not only grown over time, it is high internationally. By European standards the UK is a very unequal country; Ireland and Italy have the same level of inequality as the UK, but Germany, France, the Netherlands, Sweden and Denmark are all significantly lower and no EU countries have a higher level.

Poverty and inequality and children includes international research by UNICEF which found that children’s wellbeing was significantly correlated to a country’s level of income inequality and the percentage of children in relative poverty, but not to a country’s or state’s average income. This suggests that reducing inequality would do more to promote children’s well-being than further increases in economic growth.

The briefing recommends reducing original income inequality, by:

• Raising the skill levels of people with low or no qualifications;
• Addressing discrimination against women workers, especially on the grounds of motherhood;
• Removing the pay penalty that workers face if they work part-time;
• Strengthening the position of vulnerable workers, by introducing stronger rights for agency workers, and better enforcing existing rights such as the national minimum wage;
• Promoting unions and collective bargaining - most economists are agreed that weaker unions offer part of the explanation for growing inequality.

I would add that tax has to be part of the solution: those on lowest incomes pay too much. We need a genuinely progressive tax system. We have not got one. This is part of the solution. Abolishing the domicile rule is a first step on the way.

Richard Murphy Domicile, Economics, Ethics, Tax management