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Alistair Darling appeared last night to be bowing to growing pressure to rethink his plan to increase taxation on non-domiciled foreigners living in Britain.
The Treasury is understood to be looking at possible concessions after a wave of protests raised fears of an exodus of wealth-creating foreigners from the City.
Officials were examining the detail of the proposals and looking at ways of “making clarifications”.
The Times understands they are considering introducing provisions to assure non-doms that the Treasury’s aim was not to pry into their world-wide tax affairs, but only to tax the earnings they bring to Britain.
The rethink comes as business leaders renewed attacks on Mr Darling’s planned crackdown on non-doms.
Adrian Beecroft, chief investment officer of Apax Partners, one of Britain’s top private equity groups, said: “I just think it’s daft. There’s a whole lot of reasons why London has become the world’s financial centre and one of them is the treatment of non-doms.
"So what the hell is the point of trying to get a bit more tax revenue if you end up scaring them all away and putting a lot of people out of their jobs?”
Mr Beecroft said that he knew of several private equity executives who were planning to move to Switzerland to avoid Mr Darling’s crackdown.
Chris Sanger, a partner in Ernst & Young and deputy chairman of the tax faculty of the Institute of Chartered Accountants, said: “Many of our clients have already started to put in place how they will leave the UK. There is very little time left for the Treasury to come out and signal a delay.”
Last night it emerged that Dermot Smurfit, the Irish entrepreneur who has lived in the UK as a non-dom for 20 years, is considering moving to Monte Carlo or Switzerland if the Treasury imposes the new charges.
Although the Conservatives were first to announce proposals to clamp down on non-doms last autumn, George Osborne, Shadow Chancellor, last night urged Mr Darling to drop his plans and to adopt the Tory idea of a £25,000 charge on non-doms.
Mr Osborne believes this will raise more than £3 billion, far more than the £650 million that Mr Darling has said he could raise from his plan.
Mr Osborne told the Chancellor: “It is not too late to abandon your ill-thought out and badly conceived plans.”
The Government’s plan is for a £30,000 charge that would be levied only if the nondoms had lived in Britain for seven years.
At greatest risk may be London’s maritime services industry, including the Baltic Exchange, which depends on a small but wealthy community of Greek shipowners.
These tycoons, who include the Niarchos, Onassis and Embiricos families, provide the financial backbone for London’s ship-broking market.
Jeremy Penn, the chief executive of the Baltic Exchange, said that tax was a key factor in making London the centre of the world shipping market.
He said: “The covenant that existed between the Government and the nondomiciled resident shipowners has been broken.”
Ian Harrison, a director at the London Investment Banking Association, said: “The proposed changes could make it much more difficult for our members to recruit and retain top-class people from around the world.”
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I live and work in France and have no objection in paying high taxes and social charges here.It appears only right to pay taxes in the country where you earn a liiving.
stephen hulton, eure, france
Dear editor,
The present Govt. is shaking the trust of Non-Domiciled living in the country. If the Govt wants to change the rules, they can stop further granting the status, but the ones commited, should be honoured.
The general overseas people have faith in the British Govt. for their fairness, but this will change their feelings for ever. Similarly, Govt. at some stage might levy fee on those who have been granted British citizenship? This will shake the whole community. Hence I will request the Lord Chancellor to
think again before the law is made.
SBKhandelwal, Leicester, UK
I am a non dom in UK. Of course I pay tax on my UK salary and UK bank interest (I dont siphon it off to some other country taking advantage of non dom loopholes). But why in the world should I pay tax on my earnings on funds abroad which were not sourced in the UK and which I dont plan to remit to UK ? UK had absolutely nothing to do with that money. And even if I were to pay tax on foreign earnings, why a whopping 40% ? Why is that fair ? If anything I should pay tax to those countries where it was sourced.
Balaji, Bracknell,
How can you justify someone living in the UK for 20 years whilst maintaining a special tax status whilst the rest of us have to pay taxes?
But I'm sure for every person that leaves they will be plenty of other to fill their places.
John, Lonon,
There are surely only three reasons to be in any country: work, study or tourism.
If you are here to work you pay tax on all income and perks gained, if you are a tourist or student you do not.
Why is it felt reasonable that the most wealthy pay the least tax?
While a global agreement might be sane, we must tax every individual the same on what they 'earn' here.. what levels of tax is another question, but there should be no excuse whatever for everyone paying!
Regards
Nick Tilley
Nick Tilley, Exeter, UK
No doubt the seriously rich could pay the proposed tax, but will see no need to so do, and decamp
Middle ranking engineers or scientists, already paying tax in other countries on any income there, will not be able to afford anything like £30k, which would probably be half their income, and would have to pay the same amount for dependents. These we cannot afford to lose.
K W, Bognor Regis, England
Who is speaking up for Middle Britain - the ones who pay the most taxes and get little in return? It is these skilled and educated people leaving our shores that should worry us. Let the NonDoms live in their offshore tax havens and then restrict their travel to the civilised world. We need a coordinated international effort to prevent this 'ping pong' tax auction to attract wealthy residents.
Steve Marchant, Broadhempston, UK
What is the proposed tax-take likely to be? Surely, the value of these non-doms is worth more to the Country than what is generated in income.
Nu Lab are displaying all the signs of arrogance and the self held view that they have the franchise on being right all the time, that now is the time for a change of political direction.
Unfortunately, who ever takes over at the helm, will no doubt take at least 11 years to correct the damage already done.
J R J , Glen Vine,
There is a side to the non-dom question which is being - understandably perhaps - ignored. Many British citizens like myself have spent either the entirety or a substantial portion of their lives outside the UK. They have no intent to return, and they have cut their links with the UK. They have been - understandably also, some would argue - disenfranchised. No vote - no tax; it's a fine principle.
And yet, these citizens who are quite genuinely non-domiciled as well as non-resident, can have their estates plundered by the Exchequer when they die. Try and get an authoritative ruling on one's claim to non-domicile - hah! It will be left to our inheritors to prove it, once we are safely put to bed six feet under some foreign field. And even during our lifetimes, we are too terrified to visit for more than 90 days/year, as real non-doms are entitled to do.
Even renouncing British citizenship and adopting some other is apparently no safeguard against the depredations of the UK taxman.
Michael, Cairo, Egypt
It seems to me that Alistair Darling has been forced to reconsider almost everything he has been told to say and do by Gordon Brown since Brown moved next door!
I'm beginning to wonder if Browns' sudden surge of impatience to dislodge Tony Blair was based more on Browns' own knowledge of the state of the nations' finances that anything else.
I suppose Darling will be "rethinking" his recent assertions that all in the British economic garden is rosy next! I wonder who told him to say that??
As for George Osborne, if his alternative plan will raise 5 times as much tax revenue, presumably from the same set of people, why in heavens name does he think they are going to like it over Darlings' plan?
As it seems not upsetting these people, and destroying valuable business activity as a result, is the name of the game, then why Osborne thinks whacking all of them instead of some of them will achieve that is a little worrying!
Are there ANY capable politicians out there?
Andy, Bath,
Oh well just when we thought London house prices would be affordable to the indigenous population.
George, Glasgow, UK
Which other country? Let's see, Switzerland, Ireland, Monaco, the UAE and many other Arab states, Belgium, Singapore, Hong Kong. Spain is a tax haven if you move to Madrid, even Australia has rules to give tax breaks to foreigners moving there. In addition, there are the plentiful tax havens like Jersey or the Bahamas. So really there is no shortage of places with competitive tax systems and Darling is making a dreadful mistake. Yes, charge the non-doms a fee for using the remittance basis but to then charge tax on remittances too and continue their ill-thought war on trusts is simply stupid and hugely damaging.
Phil Packer, London,
While Mr Darling reconsiders not taxing super rich foreigners in case they might leave, doesn't he realise a vote winner would be to tax them even more, so they move out and leave the country to people who come here to work and appreciate our way of life?
GB, London, UK
I agree with Paul Amery's comment. How interesting it is going to be to contrast our chancellor's impending capitulation to the whinging of these tax-avoiders whilst at the same time he remains oblivious to protests from ordinary people over increases in Rail Fares, Council Tax and the Fuel escalator.
Labour is in the pockets of the rich and the celebrity, and has betrayed the people.
John, Bournemouth,
Surely this should be done on a european wide basis. If all the eu countries did this at the same time it would be fairer and the super-rich would be more likely to pay their fair share of tax.
As things stand, a hard working person on £1/hour over minimum wage pays a greater percentage of his earnings in tax then does a tax exile millionaire.
Bob, Bolton, UK
Pathetic,ill conceived,flip-flopping and lacking any conviction.........it must be New Labour!
James, London, U.K
A tricky balance........jobs for some clerical workers versus the principle of paying tax in the jurisdiction where you live........and are you telling me the private equity multi-millionaire (billionaire?) can't afford to pay a few tens of thousands in taxes every year? Please!
Ron, Inverness, UK
What a shambles of a government we have. A few days of lobbying by the non-doms' no doubt well-paid friends in the media and Darling folds. The non-dom loophole is grossly unfair to the British taxpayer, and should be closed. If the foreign businessman or woman is only here because he/she pays no tax then good riddance. Which other country in the world allows rich foreigners to reside tax-free while squeezing tax after tax out of the locals and making property unaffordable? Are our politicians trying to provoke a revolution?
Paul Amery, London,