Finance Bill — House of Commons, 2017-10-11
Topic: Macroeconomics
Charalambos Charalambous (Labour, Centre-left): One of the strange anomalies in our tax system over the years has been the framework constructed to enable non-doms to avoid paying tax in the United Kingdom. The outdated concept of tax exemption for non-doms, which I understand dates back to 1799, is not fit for purpose in the 21st century. It takes no account of the mobility of the rich and their ability to shift wealth across jurisdictions at the click of a button and of the fact that some non-doms can use tax havens to channel their income overseas so that they can avoid paying tax Let us be clear that the idea that the place of birth of a wealthy individual’s parents should affect how much tax they pay in the United Kingdom is nonsensical. The fact that the UK Government should play along with that by setting various inducements in the form of remittance charges of between £30,000 and £90,000 or via business investment relief is also very concerning, as is the potential lack of scrutiny into the non-doms’ affairs and background In 2014-15, 84,500 non-doms living in the UK paid the UK Government £9 billion in tax, or a total of £105,000 each. Considering the size of the wealth of some non-doms this is very good business indeed, as some offshore money is brought in to the UK for investment purposes and taxed at these knockdown rates but much of it will remain outside UK jurisdiction. The generous tax breaks given to non-doms do not apply to other UK residents and take for granted the many benefits of life in the UK and of London as a financial capital. Why would nom-doms who have lived in the UK for more than a decade, who perhaps send their kids to schools in the UK, carry out business in the UK and own property here, need further incentives via tax breaks to invest here? There would be an outcry if we gave non-doms a reduced rate of income tax or capital gains tax that was not available to ordinary UK tax payers, so why are we carrying on with this charade right now? The USA makes sure that residents pay tax on their worldwide income and seems to have little problem attracting people to New York A good business investment is a good business investment whether it gets tax relief or not, and let us not kid ourselves that the sweetener of business interest relief is anything more than a sugar-coated inducement for non-doms who have already made their money. It is clear that stringent tests are not even done to assess whether someone applying for non-dom status meets the right criteria People who are temporarily resident in the UK pay tax on what they earn in the UK, as do permanent UK residents. Everyone else should pay tax on their worldwide income. It cannot be fair to be giving better treatment to some people who have lived in the UK for most if not all their lives but who, because of some convenient accident, can elect how much tax they can be liable for. Any changes to this loophole are of course welcome I am sceptical about how much investment into the real economy any changes to the business investment relief scheme will bring to the UK. If the Government do not decide to abolish the whole concept of non-doms, they should not allow non-doms to keep their assets outside the jurisdiction if the overseas trusts were created before they were deemed domiciled, and the Government should clamp down on any tax avoidance from mixed funds brought in to the UK.