Labour has nailed its colours to the mast and boldly declared that they will eliminate the non-domiciled remittance tax system if elected. What will this Kill the Non-dom movement mean for the future wealth of the UK?
This populist “Tax the Rich” announcement actually had them leap forward in the polls past the Tories. Some politically motivated Labour advisors suggest that the number of super wealthy Non-Doms who will leave the UK if the system is dropped is minimal. They point to their analysis that there was not a huge drop in the number of Non-Doms after the Non-Dom Levy. There are others who determined there was a significant drop. Whichever analysis you believe, you have to remember that we are discussing the impact of a levy of either 30,000 or 50,000 pounds.
What will getting rid of the Non-dom system mean?
Getting rid of the Non-dom system means imposing worldwide taxation by the UK, which is magnitudes different in impact. As an international tax lawyer and the co-author of “Flight of the Golden Geese” with LSE Professor Emeritus Ian Angell, I have seen the impact of such short-sidedness on a daily basis for 25 years in my law practice.
To a super wealthy Non-Dom, the non-com levy was comparable to their annual legal and accounting bill for compliance. Hardly enough of a hit to cause one to sell up and disrupt one’s life. However, with the abolition of the Non-Dom system the UK taxing on a world-wide basis is a very large fiscal hit. Suddenly the cost of the estate agent fee and limiting your time in the UK to less than 90 days seems quite worthwhile. The problem for your average Brit is that the Non-dom consumer spending in places like London is the petro to the UK economy. With the departure of even a relatively small number of current Non-Dom’s, it isn’t difficult to imagine the devastation in the goods and service industries which depend on this clientele for the bulk of their business.
History repeating: French Election 2012
So the British voter is now in the same position as the French voter was in 2012. Should they vote for the candidate who is selling a populist “Tax the Rich” agenda or not? How did that turn out? Quite frankly, like the French who saw the wealthy flee in droves after Hollande was elected, the British people will only know after they cast their ballot whether they just helped the UK commit economic suicide.