The FT's headline, as you might expect is more accurate, suggesting that ‘Non-dom’ numbers fall in wake of levy'. However the article also reveals the figures for 3 years:
- 2006/07 -117,000
- 2007/08 - 139,000
- 2008/09 - 123,000
It's also worth noting that, contrary to some reports, the figures do not represent 'the number of wealthy foreigners' who live in the UK. HMRC's figures are simply of those people who have ticked a specific box on their tax return each year. And many of them will be second or third generation immigrants who can technically claim non-dom status despite having no great wealth or assets outside of the UK. They might just be hedging their bets.
Anyway, the guidance as regards ticking the 'non-dom' box changed in 2008/09 so many people who ticked it in 2007/08 no longer had to tick it in 2008/09.
I doubt that they all left the country. And, in any event, by my reckoning there were 6,000 more non-doms here in 2008/09 than there were two years previously. Another two years have since passed. I wonder how many are here now?
You are right when commenting on the figures. But the quality of the MSM commentary on this issue is poor and, whether intentionally or otherwise, lacks objectivity. One supposes that most commentary is inspired by professionals looking to shore up a partisan line based on vested commercial/political interest.
ReplyDeleteOn the one hand, numbers increased at a point in time simply because of the publicity afforded to the issue. One the other, as you state, the data gathering rules have since changed.
It is, in any event, not the number of non-domicilliaries which is relevant, but the total tax take from such persons. Until properly evidenced figures are collated and made available, no worthwhile evaluation of the economic rationale of the 2008 law changes can be considered. The bare political justification, or not, for the changes will never be capable of being scrutinised.
I can look at the figures for which I have private access, and they are startling in terms of the net loss of direct tax to the UK. Much of this loss, being tax previously collected on income, will be recurring. There is, further, the lack of indirect tax through expenditure which is no longer being made in the UK.
But what concerns me more is that, through what has always seemed to be a politically, rather than economically inspired, law change, and one which was at odds with representations made by the government to oversees persons being courted to come to the UK, is that the UK has now suffered a loss of credibility in its law making.
Add the remittance basis changes to the ongoing debacle which is the CFC regime, and it is no small wonder that the UK no longer seems to figure as a location to which the genuinely mobile will now consider in an international context.
Thanks for this Andrew. Much appreciate you taking the time to comment and ad your insights.
ReplyDelete"One supposes that most commentary is inspired by professionals looking to shore up a partisan line based on vested commercial/political interest. "
I'm sure that's right.
"It is, in any event, not the number of non-domicilliaries which is relevant, but the total tax take from such persons."
And yet, as you say, this cannot be measured even with the benefit of hindsight.
I'm with Andrew but agree that boxes un-ticked give us no insight into the true position.
ReplyDeleteUnfortunately fiscal policy is often driven more by politics and by various lobbies than it is by common sense. Of course we will never know the loss to the Exchequer through the exodus of wealthy non-doms and the Government has no workable model to keep track of emigrants, rich or not.
I agree with Andrew as well. We can argue ad nauseam about the quality of the data but the fact is that the increased uncertainty is bad news for the business. Also, we look at revenue generated by the 30K or people leaving but just like with the broken window fallacy, we fail to look at the missed opportunities. How many more nondoms would have come to the UK had the change not happened? What proportion of new business will hedge funds create in Switzerland rather than in the UK in the following years? Those changes are slow. Changes don't happen overnight. What we are witnessing now, correctly measured or not is just the tip of the iceberg anyway.
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