Non-dom taxes don't just hit the rich

June 12, 2008 11:03 AM

An interesting piece in the FT today reports that a House of Lords report has concluded that the Government's non-dom tax plans are "essentially unworkable", and will damage Britain's competitiveness.


No great surprise there, but the Lords report also criticised the unfinished nature of much of the non-dom legislation when it came into force in April, another confirmation of the Government's slide into chaos and incompetence.


The Lords report also called for two changes to the legislation, which highlight how the new non-dom regime will not just hit the rich:

1. Non-doms stand to lose their personal allowances if they have more than £2,000 of foreign income, a figure which the Lords report recommended be raised to £6,000.


2. The report called for special treatment for overseas students in the UK for full-time education.

Now I don't think being a full-time student or having £2,000 in foreign earnings classifies you as being well-off!


What a shame, then, that the debate over non-doms was so one-sided, missing as it did the fact that not all non-doms are rich, and that if Britain's tax regime is potentially uncompetitive for foreign workers, it is also uncompetitive for the increasing number of skilled and internationally mobile British workers who can (and are) up sticks and leave. Far better to reduce taxes on British workers than increase them on foreigners. 


It may be true that the Conservative plans to increase tax on non-doms were more practical than the Government's, but we must not forget who started the debate. Is the Shadow Chancellor a true friend of wealth-creators? We will have to wait and see. 

An interesting piece in the FT today reports that a House of Lords report has concluded that the Government's non-dom tax plans are "essentially unworkable", and will damage Britain's competitiveness.


No great surprise there, but the Lords report also criticised the unfinished nature of much of the non-dom legislation when it came into force in April, another confirmation of the Government's slide into chaos and incompetence.


The Lords report also called for two changes to the legislation, which highlight how the new non-dom regime will not just hit the rich:

1. Non-doms stand to lose their personal allowances if they have more than £2,000 of foreign income, a figure which the Lords report recommended be raised to £6,000.


2. The report called for special treatment for overseas students in the UK for full-time education.

Now I don't think being a full-time student or having £2,000 in foreign earnings classifies you as being well-off!


What a shame, then, that the debate over non-doms was so one-sided, missing as it did the fact that not all non-doms are rich, and that if Britain's tax regime is potentially uncompetitive for foreign workers, it is also uncompetitive for the increasing number of skilled and internationally mobile British workers who can (and are) up sticks and leave. Far better to reduce taxes on British workers than increase them on foreigners. 


It may be true that the Conservative plans to increase tax on non-doms were more practical than the Government's, but we must not forget who started the debate. Is the Shadow Chancellor a true friend of wealth-creators? We will have to wait and see. 

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