Episode Six: The Non-Dom Tax Tunnel
Ed Miliband’s intervention on the subject of abolishing non-dom status is interesting. The non-dom loophole is flagrantly unfair and has corrosive effects on social cohesion: nothing more overtly shows that we aren’t in it together. Look at the upper reaches of the Sunday Times rich list and it’s full of non-doms. The richest people in the US are American, the richest people in France are French, the richest in Germany are German, and so on. The richest people in the UK are from countries where you learn never to ask how somebody made their first million. The reason this loophole has survived – though it’s bigger than a loophole, it’s more like an enormous tunnel – is always officially said to be because the non-doms spend so much money here, and generate so much economic activity, that they end up benefiting the UK exchequer. I don’t buy that line, because if it were true, other countries would have copied us. No other big country in the developed world has chosen to be a residential tax haven for the super-rich. It isn’t a joke or a riff or a slogan to say that the UK has a different law for the rich: the UK actually does have a different law for the rich. London is a wonderful city in many respects, but from the tax point of view it is Monaco-on-Thames.
The non-doms have long been the subject of all kinds of threatening noises from opposition parties, who then tend not to do anything about them when they get into power. A big role in this is thought to be played by donations from non-doms: Greek shipping magnates are said to have talked the Tory government out of fixing the hole in the 1980s, and it’s known that a number of prominent non-doms made multimillion pound donations to New Labour. There were 67,000 non-doms when Blair came to power in 1997. Ten years later, the number was 137,000. Miliband owes nothing to people like that, just as he owes nothing to the right-wing press; this gives him a freedom of movement which for the most part he’s chosen not to take. As the polls stay flat and the demands for big gestures grow louder inside Labour, there may be more where this came from.
In the meantime, I would love the Treasury to make public its calculations on the costs and benefits of the non-dom loophole. There must be such a data set: working out the costs of tax policies is what the Treasury does all day, every day. Maybe they could share some of those calculations with the people who paid for them.