Non-Dom Nonsense

I have already written once about Britain's "non-domiciled residents": people who live here in proliferating numbers while avoiding tax comprising double-figure billions through a loophole which is unique in the world, to the benefit of nobody in this country beyond a select few estate agents, charter companies and West End boutiques.

After a sludge of apologists in the weekend press have tried to defend the indefensible, however - and the Times leads with more drivel this morning - I must return to this grubby, distasteful subject again.

The ill-informed, or downright lying commentators who say non-domiciled status is an important benefit for the economy are most vociferous in their pleading when linking it to high finance.

The notion that the non-dom loophole was somehow relevant to the health of the City began as Labour spin against Conservative proposals to do something about closing it. This is, and always was, the most abject, laughable rubbish.

For those who might be taken in: there are two foundations on which the City rests, and two alone. The first - an accident - is that it is an English-speaking marketplace which fills the inconvenient gap between the Tokyo close and the New York open. No global finance firm could afford not to have a presence in Europe: they all need to take advantage of trading hours during this time.

The second, which began by design and has become a fragile inheritance, is that our marketplace is relatively lightly regulated and flexible. It is this, together with our speaking English, that keeps global finance in the City rather than Amsterdam, Paris or Frankfurt.

Glaringly unfair tax breaks for those who need them least have nothing whatsoever to do with it.

I believe - strongly - in smaller government, lighter regulation and lower taxes (and in no EU as a condition of achieving all three). I also believe in fairness, paying my way and equality under the law, and that's where the non-doms and I part company.

Indeed, as a City worker myself with a foreign-born wife it would benefit me in a narrow sense to take advantage of the non-dom status which some people would have you believe is responsible for keeping me in London. But I don't: I pride myself in my honesty and sense of fairness, and I would be ashamed to.

And besides, there are already a number of ways in which people can legitimately avoid tax and to which I have no objection. The use of family members' allowances, gifting, trusts and so on is perfectly acceptable as these harmless methods of avoidance are open to all of us. If tax avoidance is so important to you there is always non-resident status, too, under which you can not pay any UK tax provided you don't live here for most of the year.

If the government want to bolster the City, they might choose to extend the preferential tax treatment enjoyed by these freebooters to the rest of us who work there. Or they could block all further EU financial market regulations, abolish the FSA and revert to a system of self-regulation under the supervision of the Bank of England, scrap stamp duty on financial transactions (including on property), allow tax relief on financial product development and adopt a flat tax across all forms of income and capital gains.

The first option is unconscionable. The second requires knowledge and courage, two things conspicuously lacking over the last ten years. And the third option - proceeding with the current inequitable and obsolete arrangement - is an insult to the substantial majority of those who work in finance and are not able to take advantage of the loophole, and indeed to all the honest, hard working taxpayers who really keep this country on its feet and represent the body of the British people as a whole.

Even more insulting than the argument that this country's prosperity is in the gift of a few thousand kleptocrats and tax fiddlers is the notion that non-doms make enough of a contribution through the taxes which they do pay and the services they consume.

You pay VAT? Wow! Guess what? So do the rest of us! You use private schools and pay for private medicine? Wow! Guess what? So do the rest of us - and we still pay taxes on top!

Finally, it is worth reiterating a fact which has somehow escaped mention in the media of late. There is one other group in Britain which benefits from the non-doms' presence: the Labour party.

Many of the wealthiest non-doms, whose profits from the loophole are the most immense, are or have been major donors to the government: Lakshmi Mittal, Gulam Noon, Christopher Ondaatje and doubtless many more.

The non-dom tax loophole is a major and growing blight. It is irrelevant to the success of the City; it is unnecessary as there are many other, fairer means of tax avoidance; it is unfair as it allows people to live here permanently without paying their dues like their fellow residents; it is, in short, totally out of place in a respectable, populous, diverse, modern country like the UK.

It should be closed forthwith.

If you are a non-domiciled resident of these islands and you are reading this, you have my sympathy - up to a point. Nobody likes having their candy stolen. But if there were an ounce of honour or integrity in your character, you would either become non-resident (and slither off to some trashy tax haven should you wish), or start paying your way - like everyone else who lives here.

In fact, if they weren't being bribed to keep the loophole open, the government would do well to write to all the non-doms in Britain saying just that. Stump up - or else up stumps to Monaco, or Liechtenstein, where you belong.


UPDATE - Read ludicrous non-dom whingeing about losing the right to live here permanently tax free - here!