As the Guardian reports this morning:
Jeremy Hunt is considering scrapping Britain's non-domiciled tax rules in next week's budget, it has been reported, in a move that would see him poach one of Labour's key fiscal policies.
If it is announced in next week's budget, the Conservatives would be mirroring a Labour policy that Hunt has previously criticised. Abolishing the non-dom tax regime would raise an estimated £3.6bn a year.
As a very long term campaigner for abolition of the domicile rule I do not care who delivers this policy, which has always ensured that taxation in the UK is profoundly unjust because it has directly discriminated between people on the grounds of their place of origin. That would be illegal if undertaken by anyone but the government itself. My reason for wanting rid of this rule has always been ethical in that case.
In reality, this rule would need to be replaced by a short term residence rule. In the Taxing Wealth Report I have suggested that this means that the claimed revenue raising capacity of this change is open to doubt, whilst accepting the noted estimate because there are so many unknowns around this particular issue that any estimate is bound to be much more approximate than almost any other I have made when undertaking that work. Both Hunt and Labour might be disappointed by the outcome as a result, but I will not because the unethical discrimination will have gone.
Politically I would also add that this is a rare smart move by Hunt. He is going to lose the election, come what may, but removing Labour's position on this, undermining the very many ways in which they say that this money is going to be spent (which just shows that they have not the slightest idea that taxation never funds government spending) is a clever thing to do. Reeves has always been on the back foot when claiming she can deliver balanced finances when glaringly obviously she cannot and will not. Her position will now look to be even more untenable. I cannot see her reacting by talking sense, however. That would be too much to hope for.
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Removing the non-dom status completely and replacing with a temporary residence scheme (the length of a medicine degree perhaps – 6 years) would not raise an estimated £3.6bn a year.
The people who provided that estimate said it was only valid if there was no temporary scheme, no behavioural changes, and no invocation of unused double taxation agreements.
There is a solid ethical or equality of opportunity argument for changing the rules, but those hawking around that £3.6bn estimate should be ashamed of themselves for not reading where it came from.
Are you not noticing what I wrote?
Last two sentences- totally brilliant
I can see there may be a need for some kind of scheme for temporary residents but the 6 years suggested by Hallam seems excessive. What do other countries do? Could the period be linked to the length of an initial visa, perhaps?
At least four is required
Hallam is a troll
So, we are all being set up for the NEXT election after this one perhaps, where the domicile rule will be restored, the tories will win by saving those from the very policy they created but hoped that Labour would get the blame for?
Oh to be a fly on the wall in those meetings.
Cynical? Moi?
Never.
How do other countries address this issue?
Temporary residence rules
Domicile only exists in the UK, Ireland and in a differnt form, Italy, which shows its empire origins
So, presumably we could just cut and paste rules from a country that we think has got it right? Do you (or anyone else) have a view on who has this right?
Many countries could do this
But actually when the new residence reules for the UK were created in debate at the Treasuey from 2009 – 2011 (in which I was intimately involved, and to which I can rightly claim a big contribution) rules for this were also discussed and even drafted. All that is required should already be on the shelf.
I think there is always the possibility with the Tories that just before an election they will say something to a) give the impression that they are doing something and have listened, and b) Clearly to undermine Labour. It does also make sense for them to do things that will give an incoming Labour Govt, and its strict fiscal rules, less room to play with.
It could be promises to.
Cut taxes.
Windfall taxes.
Changing rules like this one.
More public spending.
Build more housing and address the housing crisis.
etc, etc.
I think if they do this it will not be because they actually want to, but as you say, politically it would probably be a smart move. Then if they get re-elected, it is changed and watered down to be a lot less then expected.
The Tories are cornered and fighting for their existance. I feel that they will say and do whatever works for them, but also ties Labour’s hands if they win.