I was on the Politics Show on BBC1 yesterday countering arguments that a combination of the 50% income tax rate and the changes to the domicile rule will undermine the competitiveness of the City of London.
This is not exactly hard to do. Let’s be honest – any so called entrepreneur who a) thinks tax is sufficient reason to change business location and b) thinks paying a fair contribution back to society for the opportunity to make considerable profit is not an entrepreneur at all. They’re either a) a wealth preserver – which is an entirely different mindset and from a completely different stage of the wealth cycle or b) so lacking in empathy that they have no chance of understanding the need of customers and so is almost bound to fail in business. I made those points, I think. Of course – individual bankers can think these things – but then they are neither entrepreneurs or in business: nor is there evidence they add value to society so that is another issue, and I did not have time to make that point.
But I also said the domicile rule was racist and blatantly discriminatory, partly in response to Digby Jones who supported it, he said as a matter of principle. I have been challenged since doing the broadcast to say why it is racist. I did so because I am entirely convinced that the domicile rule contravenes the UK Race Relations Act as amended in 2003 because it blatantly discriminates on the grounds of national origin – and under that Act this is illegal. Using the criteria that something that contravenes the Race Relations Act is racist I think my use of language correct. My full argument is here.
But whichever way you look at it Digby Jones is wrong. Not paying tax is not a principle – it is an abuse.
Richard Murphy Domicile, Ethics
Tax Justice Network: Non-doms: Britain’s integrity postponed.
I worked with David drew MP to try to get non-doms banned from making political donations to UK political parties.
A number of other MPs also worked the issue.
We thought we’d won. But Jack Straw has sold out on the issue in a most underhand way. The law will not come into effect before the next general election.
As the Lib Dems said:
To support an important piece of legislation stopping this underhand practice and not bring it in before a general election is like banning a drug-taking footballer but allowing him to play in the cup final
TJN has all the links.
But I just wonder what more the Cabinet can do to commit electoral suicide?
Richard Murphy Domicile
A new l;aw was created last Friday. Called the Political Parties and Elections Act 2009 it bans non-domiciled people from making significant donations to UK political parties.
I am delighted to have played a small part in the intense lobbying by Labour MPs to enact this change.
Unfortunately the new law does not go as far as I wanted with regard to companies.
But it is another step in the right direction, and another win for the long tem campaign I have been involved in ion the influence of non-doms on UK politics.
Richard Murphy Domicile
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
The FT has reported that:
TIAA-CREF, one of the world’s biggest money managers, is to open its first overseas office by setting up a base in London to step up investments in European property. The move signals foreign buyers’ growing interest in the region’s real estate market.
Do you recall that only months ago we were told that London would be dead if the domicile rule was changed?
That was wrong, as is almost everything the Right says on tax.
Richard Murphy Domicile
