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Wednesday, 13 February 2008

A taxing problem: should the rich pay for cheese?

New Labour certainly keep their promises. Before they were elected, they promised to reform the loophole that enables the super-rich to avoid paying tax, by claiming "non-domicile tax status". And now, 11 years later, they're still promising to do it.
This ruse involves living in Britain while not being an official resident, and is one of the main ways in which the richest 54 billionaires in the country have paid on average 1 and a half per cent tax. Now the Government has said they can carry on doing that, except that after seven years they'll have to pay £30,000 a year to keep claiming this status. So now there's a campaign to stop this. For example, The Times tells us these talented types will leave the country, taking their "ingenuity and enterprising energy."
Because presumably someone like Roman Abramovich will say, "Now instead of a billion pounds I'm only going to take home £999,999,970. Well it's hardly worth the bother, I'm going back to Russia." Maybe some billionaires won't notice the full scale of the attack until they receive their first wage packet after the law starts. They'll open the envelope on a Friday afternoon and squeal, "Oh no – there's hardly anything left."
Then Mrs. Abramovich will scream: "How am I going to manage with 30 grand missing? I was going to buy a leopard in the morning, now I'll have to wait until Tuesday. I can't go on struggling like this."
You can defend any amount of greed or barbarity on these grounds. You could have said, "The proposals to restrict Roman emperors from selecting slaves at random to be subjected to sexual depravity for their amusement, will force these talented tyrants to leave Rome, taking their ingenuity and fiddling skills to Persia." Maybe we should make armed robbery legal, so that armed robbers are attracted to the country, where they'll provide a crucial boost to the stocking industry.
The genius of this argument is it says that to let the richest people in the country not pay tax is good for the economy. In effect it's saying the less we take from them, the richer we are. If these people who defend this approach got a job as a salesman they'd boast, "Today was fantastic. I sold a two-year-old Mercedes for a pound, a four-bedroom detached house for nothing and an original Rembrandt as a swap with a dishcloth. The trick is not to ask them to pay anything as that ensures they come back."
Our tax laws have become so soft that last year the International Monetary Fund put us in the same category as Bermuda and the Cayman Islands. Along with Ireland, we're the only country that allows the wealthy to live here and pay no tax through this system, and apparently we should be proud of this. So we're bragging, "We're so soft they come to rob us. Isn't that wonderful? They don't rob France or Italy, just us. But we mustn't upset them or they might go somewhere else and rob them instead."
So maybe we should go further in enticing the world's rich, and let them off VAT as well. And think how many would come if they didn't have to pay for car tax or a TV license. And we could bring in a rule that if you earn over a million pounds a year you don't have to pay for cheese.
The other argument always used to defend low tax rates for the rich is that stricter rates would somehow hit the poor, as in the sort of articles about inheritance tax that say the worst victims are somehow fishermen in the Orkneys who live in a canoe. And they're trying that with the non-domicile status rule, so there was a letter in the Daily Telegraph from a woman lamenting that although she's not at all rich, the change would force her to leave the country.
And you expect it to continue, "I claimed non-domicile status after arriving here from Cyprus, simply in order to fulfil my late husband's wishes of providing a palace full of billiard tables for his beloved poodles. If this vindictive law is passed, I'm afraid I will have no choice but to fire the little treasures off into space."
It wouldn't be so bad if the people opposed to the proposed change were honest, and said, "I feel very strongly that this is a counter-productive measure because I want to keep all my money, even though I've got more than I could ever spend because I want it and I don't care about your health service because I own my own intensive care unit so that money's mine."
Which is why non-domicile tax status is one of those modern phrases, like the names given to various disorders ascribed to unruly kids, that makes you think "Oh that's what they call it now is it? Why can't they stick with its simple old-fashioned name, of being a selfish, greedy bastard?"

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