I highlighted the UK's promotion of tax havens yesterday and was as a result asked if their abolition would be the best indication of a political party's commitment to tax justice. It would be tempting to say yes, but I am not sure that is true.
If a party really wanted to evidence commitment to equality of taxation for all in the UK it would, I think, have to start with abolishing the domicile rule. This rule, which quite literally provides the opportunity for wealthy people who do not consider the UK their permanent home to permanently avoid the obligation to pay UK tax on all their income and gains, quite clearly establishes a situation where people secure a social and economic advantage based on an accident of their birth and and / or their wealth. No one who believes in equality and that we should all be treated equally before the law could possibly believe that this is remotely related to any concept of justice. It is instead wholly related to providing an advantage to a tiny and wealthy minority at cost to all the rest in society in a way that deliberately makes clear that there is, quite literally, one law for the rich and one for everyone else. This is why I have campaigned against it for so long.
That said, as I noted recently:
There are good reasons why the UK may want to provide special arrangements for the people who take up short-term residency in this country [if the domicile law is abolished] so that they do not suffer undue taxation, and even double taxation, as a result. I would therefore encourage any government to offer someone coming to the UK the chance to only be taxed on their UK source income for a period of up to 5 years, but after that anyone still living in the UK should be taxed as if they are fully UK resident in exactly the same way as all other people living in this country. The adoption of such an arrangement would allow the domicile rule, and all the abuses that go with it, to be abolished, for good. It should never be the case in the future that the UK can be seen as a tax haven, which the domicile rule has permitted for some of the world's wealthiest people.
This would be the best indication I think any party could give of a commitment to tax justice in the UK because without the abolition of the domicile rule tax justice is impossible in this country.
So, if you have a demand to make, this is it.
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Just reading ‘The Great tax robbery: How Britain became a tax haven for Fat cats and Big Business”. It deals in some depth with the issue of ‘non-coms’. As several reviewers say, it is depressing reading when one sees the scale of the abuse and tremendous turn around which would be required to remedy the situation. All credit to those who, like you, have taken on this fight. If only more politicians would and the media gave more exposure of the problem.
Richard,
Complete agreement with this blog. Start with abolishing the domicile rule, introduce a passport based system of taxation and follow through with a NSDAP style system of payments. Any party advocating this platform as a the heart of their programme would soon find themselves with a clamouring majority next month.
Ed Balls, please note.
Any rules that encourage people to avoid paying tax when it is known that tax is used to pay for public services (and purchase private sector goods and services to that end) should be scrapped forthwith.
Let us hope that this happens soon as without such action there can be no general principle of paying tax that is due because the principle that exists instead is how to avoid paying tax.
Indeed I can thing of nothing more more traitorous than not paying your taxes.
Richard
Why five years?
You are basically saying that for 5 years non-doms have a better tax regime than UK domiciled individuals.
I’m really not sure why. Surely equality demands that every individual is taxed the same? You are arguing that some individuals get better tax treatment than others. ‘undue taxation’? What on earth is undue taxation? It is either due or it is not. Two people stand side by side with identical wealth and income profiles but you say one should be taxed less by an accident of birth to avoid ‘undue taxation’ which the other individual will be suffering!!! and which you will say is properly due.
Frankly I am baffled.
KRs
Tim
Tim
All tax systems have to embrace what is possible and reasonable
It is not reasonable to ask a person shiort term rexident in the UK to change their whole world wide affairs to align with the demands of the UK tax system and not fair to do so either without double tax poitentially arising
After five years the link is strong enough to demand that
But you knew that anyway
“and not fair to do so either without double tax poitentially arising”
That is what taxation treaties are there for is it not?
What I cannot understand is that if (say) Ireland create a benign tax regime for companies to relocate to Ireland you complain and yet you seem to be saying that it is OK for the UK to create a benign tax regime to encourage foreigners to come to the UK.
You would not be asking anyone to “change their whole world wide affairs” you would just be asking them to return details of that to the UK tax authorities.
If they are prepared to reorganise their life to live in the UK, why not be taxed in the UK
KRs
Tim
A temporary arrangement for students and people on secondment – which does however have full tax paid on UK income – is not a benign tax arrangement
Yet again, you are talking utter nonsense
Temporary stays are not making use of the UK permanently
If you deny that then there is no point debating
I’m 100% behind you Richard on abolishing this ridiculously over-generous tax break for non doms, particularly as now tens of thousands of EU migrants also benefit from it.
But what of the other side of the domicile basis of taxation? I refer to the fact that liability to Inheritance tax is determined by domicile rather than residence. As you know, it is possible for someone who has never set foot in the UK, and who has never owned any assets in the UK, to be liable to IHT on his world wide assets on death due to his being deemed domiciled in the UK.
If the government does away with the concept of domicile, how is liability to IHT to be determined?
Passport taxation, in my opinion, limited by a seven year rule of being away