James Harding, Business Editor
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Sorry. This is a bit rushed. The interesting bits have been cut out and the parts with real popular appeal have been saved for another day. In the spirit of Alistair Darling’s autumn statement, this is a hurried, heavily edited text.
No doubt, the Pre-Budget Report would have been jammed with good lines – on income tax cuts, climate change levies and stamp duty - if there had been an election. But, it seems, no sooner had the Prime Minister opted out of an early poll than the Chancellor started hitting the delete button. As a result, the PBR turned into the Bermuda Triangle of political statements: new ideas had, rather mysteriously, gone missing.
To be sure, Mr Darling’s intended message was that Labour is the party of public services: while the Conservatives want to cut inheritance tax in such a way that it rewards the wealthy, the Labour Party will save that money and plough it into schools and hospitals.
But this was not the Labour fightback promised by the Prime Minister, as much as it was a rebuttal of the Tory agenda. The Chancellor co-opted Conservative ideas that he liked, such as the pledge to provide more housing for the Armed Forces and the idea of switching from an air passenger duty to a levy on planes.
And he set out to rubbish the tax proposals that seem to have so skewered the Brown Government. Mr Darling’s changes to inheritance tax were more thoughtful, if less aspirational, than Mr Osborne’s. Unfortunately, they will make little meaningful difference to the tax paid by British people, as evidenced by the fact that the Treasury has costed them at only £1 billion.
However, on the treatment of non-domiciles, Mr Darling’s statement was more than just slight. It was economical with the truth.
The Conservative proposal to impose what is in effect a £25,000 poll tax on wealthy foreigners living tax-free in the UK would not cover the costs of an inheritance tax cut, Mr Darling said, because “only an estimated 15,000 would earn sufficient money abroad to make it worthwhile to maintain non-domicile status”.
This may be true. Most probably it is not. The fact is that Mr Darling does not know. Nobody does. Maybe 15,000 of them could afford it on their UK taxable income, but their overseas riches are not revealed. The whole point of being non-dom is that you don’t have to declare your worldwide income. Mr Darling knows that and, frankly, he should know better. The place of non-doms in the UK is an issue that, if not dealt with responsibly, could cause great damage to the health of the economy and the fabric of society. In a speech that seemed to leave much on the cutting room floor, this was a piece of selective briefing too far.
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Does anybody know how many of the non-dom's presently living in the UK are about to leave? I read somewhere that there are a total of 119 000 non-dom's. How many of those can fford to pay £30 000 a year just for the privilege to live in the UK? My husband is a non-domiciled UK citizen. We most certainly cannot afford to stay, we have to move. For us this means that we have to leave our children and grandchildren behind, pack up our house and move abroad. It also means that my husband will be loosing a place he called home for the second time in his life. He came here in the 70th as a refugee.
We know of at least 10 more couples who are in the same situation most of them are now packing and leaving. After all I have seen and heard on the subject at least halve of the 119 000 people who are non domiciled will have no choice and leave, if not more. The looser will be the UK economy because I will be doing my shopping in another country as will 3 other couples living on my street.
Gina Towhidi, Cobham, Surrey
Sorry but some non doms who live here and pay 40% tax do declare their earnings abroard, not everyone has riches abroad,. I was under the impression that as long as you dont bring interest back then it is o.k. I There must be plenty of don doms who dont even earn above 40,000 pounds on their earnings abroad. That means they do not have a million pounds. How can Mr. Darling target these people. I can understand thr very wealthy, but having under a million is not wealthjy. By the time labour taxes everybody, I dont think we will have a decent economy left.. Tax the very rich I agree, but not the people who have workd hard and have legally put their money wherever they want, to spend it the way they want., on a bit of quality of life for themselves and their children.
pat gold, London, England
Harry Erwin.
Your story doesn't add up. Do you have non-UK earnings or not?
Paul, London, UK
Alistair Darling has continued for years to state that the ever increasing amount of tax collected will be spent on health and education. The fact of the matter is that a huge ammount of money spent on health is totally wasted. What we require is a cost effective health model that does not waste gigantic sums of tax payers' money. If you need to know about an effective public health system you should take a look at Australia, where I have been living for the last 4 years. And as for education, why is it that a large number of school leavers cannot read, write or speak reasonable English. And arithmetic appears to be too difficult without the inevitable pocket calculator. The Health system, and the Education system in the U.K. are, like the labour government, "down the Swannee".
steve fisher, brisbane, australia
Hard to judge at this point, but I only make £40,000 a year as a university lecturer, so I don't know where I'm find the money.
Harry Erwin, Sunderland, Tyne and Wear
There are many more non doms than most people think - the Tory estimate of 150,000 is nearer the truth than Labours 15,000.
The key is that it is a very fine balance between charging a rate that is acceptable and one that becomes uncomfortable to the many non doms who are wealthy, spend their money in the UK, invest and employ people. The figure of £30,000 PLUS the loss of Personal tax allowances will tip a great deal of people over the edge. the reality is a figure closer to £40,000 annual charge. That is I imagine £40,000 of after tax income meaning a person would have to earn approx £70,000 gross just to pay their non charge.
That is the sort of figure that will destroy the benefits most "average" non doms have. Only the super rich non doms will not be affected and there are many more wealthy rather than super wealthy non doms who's contribution will be sorely missed if they decide that this is the straw that broke the camels back. I for one will not be staying in the UK.
Michael Smith, London, UK