Monday, 11 February 2008

Hate non-doms, hate art

The non-doms are fighting back. A large number of newspaper articles are starting to crop up, pointing to the dire consequences of actually asking these free-riders to pay a little tax. Here is a particularly pernicious example from Saturday's Times:

"The British public will miss out on seeing some of the greatest works of art in the world because of the Government’s tax plans for nondomiciled foreigners, the director of the Tate said yesterday."

Alarming stuff; without the non-doms, the UK will be turned into a cultural wasteland.

Funnily enough, I was outside the National Gallery on Saturday afternoon. Looking over at the building, I wondered whether the availability of art in Britain would disappear just because the Treasury charged non-doms an annual fee of £30,000 to be exempt from tax on their offshore income and gains. I doubt it somehow.

Perhaps I am being too complacent. However, I found this paragraph revealing:

"Five of the largest donors at the Tate are non-domiciles. They include Noam Gottesman, an American businessman and noted collector. He is believed to have given more than £1 million to Tate Modern’s construction and he bought a variety of art to fill the galleries – notably Untitled (Rooms) by Rachel Whiteread, a Turner prizewinner. "

A £30,000 fixed fee is unlikely to worry Mr. Gottesman too much. It is also doubtful whether any major benefactor would find this modest fee that "taxing". The advantages of non-domiciled status easily outweigh the cost of the exemption.

Of course, we all know that is really going on. The vast majority of non-doms are here to avoid tax in their home countries; they contribute virtually nothing, and they push up house prices. The UK economy would be better off without them.

It is time for them to go.

19 comments:

Anonymous said...

"they contribute virtually nothing, and they push up house prices. The UK economy would be better off without them."

Another silly post. What you should be trying for is that the permanent residents of this country pay the same rates of tax as the 'non domiciled' residents.

By the way, the sort of house a multi millionaire 'non dom' might buy have long been out of the range of all but a very select few. So they do not really impact the house prices that the rest of us pay - this will be illustrated when the crash takes effect, you will see houses in kensington and knghtsbridge still changing hands for millions. So the assertion that 'non doms' drive up house prices is very probably untrue!

By the way, suppose a 'non dom' buys a house, perhaps two, they will pay stamp duty, given the value of the house that could be anything up to £100,000. That might be one or two times over, so in the first year the 'non dom' buys his or her house in Knightsbridge and one in the country, they may well have contributed anything up to £120,000 to the tax man directly (stamp duty on purchases over £500,000 is 4%).

It would take a man on average salary ( 25,000 pa my calculation is that he might pay 6000 tax each year) It would take Mr or Mrs average salery 20 years to pay the same amount in his taxes that your nasty 'non dom' does in one year. I know Mr & Mrs average salary pays additional taxes VAT etc but just on two purchases the rich 'non dom' has contributed significantly more to the economy than Mr or Mrs average salary will do during a good proportion of his or her working life.

Your assertion that mr or Mrs 'non dom' contributes nothing to the economy is shown to be false again!

Now factor in that Mr or Mrs 'non dom' is unlikely to use the NHS should he become ill, but he will probably buy his health care from BUPA if he is in London when he falls ill, then that too will be subject to VAT. Again he will contribute to the econoomy in that instance too - all the while not being a drain on the NHS either.

Now suppose Mr or Mrs 'non dom' want to buy a car, are they actually going to buy a ford mondeo?

Hardly, it'll be a Jag or Rolls, something like that, in which case excise duty VAT and petrol tax - all that good stuff will be paid too.

So your assertion that a 'non dom' contributes nothing to the economy is in actual fact - utter tosh!

Nigel Tuffnel said...

What the non-doms contribute in the way of tax is nothing compared to the misery of the rich/poor divide that is turning this country into a third rate society--lawless, careless, shiftless. This is the real problem: the poor are contributing less and less to society. If more people were working and not freeloading off the state, there would be no need to go running to wealthy foreigners to make up the difference. Besides which, they have made a huge contribution to the absurd rise in house prices, by encouraging everyone lower down (aided and abetted by the scum estate agents) to raise their own prices. So, anonymous, what the offshore rich are giving to this country they are taking away twice or mroe over. Make them pay up as the US makes its non-doms pay up, or out they damn well should go.

Anonymous said...

Nigel Tuffnel: The US doesn't use a notion of non-domiciled in the tax code in any way I'm aware of. Perhaps you mean the US requires non-resident citizens to file tax returns and to pay tax on worldwide income (unless it's offset by credits for taxes paid to other nations)?

Jien said...

I am a resident of the UK, domiciled in my home country, and I'm surprised and faintly flattered to discover that I'm as horrible as all that. I am not avoiding taxes in my home country, and I haven't bought a home in the UK, so I find it unlikely I'm driving up prices, except perhaps for other renters. But then I couldn't conceivably afford a place in Kensington or Chelsea.

In my case, I have immigrated to the UK and sensibly paid for tax advice before doing so, and I thought the different status for non-domiciled residents was bizarre. I couldn't and still can't see any point to taxing people differently based on domicile. I think it makes sense to equalise those laws, so UK residents pay the same UK taxes regardless of domicile.

I hope you'll tolerate me not liking a couple of things about how this is done, namely that parts of it are being done retroactively, which is not fair. And I hope you'll tolerate me being grumpy about having spent a lot of money on tax and trust advice that is suddenly obsolete. I can approve of improving this law while moaning about the money I essentially just flushed down the toilet and would have preferred to spend elsewhere than paying solicitors.

But I do object to your claim that we immigrants should all just go home; just about everyone who immigrates to the UK is resident but non-domiciled for some years at least. In coming to live here, I have carefully followed UK law, which I certainly didn't and don't intend to be a greedy or immoral or "freeloading" thing to do. The law happened to be oddly written in this case, and it's being improved. I don't think my actions deserve your hostility, but perhaps I'm missing something.

Oh, and regarding not contributing, that's sadly true; the Home Office does not allow me to work, even in voluntary work, so to obey the law of the land I cannot contribute.

Nigel T said...

Anon
It's not just worldwide income that non-residents are taxed on in the US--it's also capital gains. All the best.

APL said...

I am first anonymous. Hereafter ´APL´.

nigel t: ¨What the non-doms contribute in the way of tax is nothing compared to the misery of the rich/poor divide that is turning this country into a third rate society--lawless, careless, shiftless.¨

This is getting ridiculous. Non doms are not causing a lawless careless shiftless population, - non doms are probably the most law abiding fraction of the population - those characteristics are fault of the bloody welfare system. Fourty years of welfare had taught a significant proportion of the indiginious population to believe the state owes them a living, they have become experts at milking the system.

Nigel t: ¨This is the real problem: the poor are contributing less and less to society.¨

Well, you may have a point there, but that is the result of socialism. The socialists are busy building their class base of ill educated poor.

Nigel t: ¨If more people were working and not freeloading off the state, there would be no need to go running to wealthy foreigners to make up the difference.¨

We don´t need to go running to wealthy foreigners, the reason we are short of cash is because Gordon Brown has squandered the lot, on his Public private partnerships, his squirting money and any government funded body regardless of results, his irresponsible bailing out of a bankrupt bank.

In short if we are bankrupt it is because of this government, specifically Gordon Brown, not ´non doms´.

Oh! and finaly, as Jein says, if the government permitted ´non doms´ to work, they could contribute to the economy.

ukhousingbubble said...

APL

Thanks for the comment, all views are appreciated, even the angry ones.

I am surprised you take such exception to my tosh, when for days newspapers have been full of wild stories warning of the dangers of taxing non-doms. Take the story that I hightlighted. Do you really think that the affect on culture in the UK will be "devastating" as the director of the Tate seems to think. Today, I read similar scare stories in the Times that suggested that the City of London would collapse if we ask non-doms to pay a fixed fee after seven years of residing in this country.

Of course, I am sure we can find marginal examples where some non-doms pay the odd contribution to the Treasury. Stamp duty is probably one. However, I am totally with Nigel Tuffnel who wrote "What the non-doms contribute in the way of tax is nothing compared to the misery of the rich/poor divide that is turning this country into a third rate society--lawless, careless, shiftless. This is the real problem."

Indeed, this is the real problem.

So, I repeat, let us tax them and send them on their way.

Again, thanks for the comments. Although I disagree with you, I respect your opinion.

Alice

APL said...

Alice: "Again, thanks for the comments. Although I disagree with you, I respect your opinion."

That is very kind of you to say. By the way, I am not really angry, just enthusiastic. You are the one who claims to be 'Angry Alice'.

My problem with these sorts of comments - foreigners are bad, is that you make them or repeat them without any corroboration. For such a serious accusation, that is the worst sort of demagoguery. By all means make your assertions, but you should corroborate them against facts. I don't think you can.

Not only is it untrue that 'non doms' are the cause of lawlessness, carelessness or shiftlessness, it is a gross slander of may good well meaning people. Some of them may be, all of those things but it is simply wrong to tar every 'non dom' all with the same brush.

Five minutes with the back of a cigarette packet and a crayon tells me your financial argument against 'non doms' is wrong. That being the case, in my opinion, you do yourself an injustice if you cast your argument in those terms. Unless you really believe it.

Perhaps you should start by defining your definition of 'non dom'?

It seems clear as the nose on my face to me, that some one who is a wealthy individual and an foreign national, for you, falls into this group.

Since you have framed your assertion in terms of the tax contribution that 'non doms' supposedly do not make, would you like to comment on my point that a wealthy 'non dom' only has to buy a house in Mayfair (shall we say in Mayfair such a house might be £10 million, at 4% stamp duty ) to have paid the equivalent in tax that a domiciled individual on average earnings and paying tax at the basic rate will pay in a life time.

Then perhaps you might contradict (with facts please), that such a person, may during his life time fund his needs from his own purse, and not need public subsidy or use of the rather shabby National health service.

So this person, does actually pay tax, does not actually use up 'things' in the UK that can not be replaced and does not 'take' anything away from the UK when he leaves, his house in Mayfair being fairly substantially fixed to London. How actually is this person a drain on the UK?

APL said...

Alice: " when for days newspapers have been full of wild stories warning of the dangers of taxing non-doms. Take the story that I hightlighted. Do you really think that the affect on culture in the UK will be "devastating" as the director of the Tate seems to think."

Sorry, it is rude of me not to answer your questions. No I doubt the first of those things will come true.

But who was it who said you should never believe anything you read in the newspapers.

traderboy said...

good thread.

can someone clarify what non-dom actually is? i don't know the definitions, and am interested in jein's example of being a resident of the UK but being non-domiciled. what are the reasons someone would do this (aside from tax)?

also, my two cents worth, an arbitrary fee of £30k to get this status seems a dumb idea (and unfair), either the govt allows non-doms their tax status or doesn't. greedy socialist labour.

Nigel Tuffnell said...

APL

Your argument is specious. I am not saying that non-doms "caused" the decline of UK society; I am merely saying that they do nothing to CONTRIBUTE to a brighter future. They are here for their own uses, nothing more. Apart from raising the prices of luxury homes, avoiding taxes in their nativev countries, hiding assets, having free medical care and all the benefits of Brits, they do nothing to contribute to society at large. Why should they be given tax breaks? As for the argument that they cannot work in the UK--that is an utter hoax; most of these characters run opeations outside the UK, and do not need to be on a UK payroll (definition of "working"); however, they run their operations as if London was their HQ. And they don't pay for the pleasure. Let them go to Bahrain and stink in 150% heat if they want a tax-free haven. As for the argument that they contribute to the arts: another joke. All arts contributions are deductible from tax; does New York need to invite non-doms to participate in arts funding? No. Why does London need to beg for help from foreigners? Welcome to the new UK, where everything goes. And most of it has.

Traderboy
A non-dom can live here and is only taxed on that portion of income/gains that is made within the UK. How easy a trap that is to avoid for any crafty entrepreneur.

Panos Konstantinidis said...

Greek shipping industry set to desert UK

If all the non-doms leave this will surely mean less jobs and less jobs mean more uncertainty. UK is a global economic power and the pound is a strong currency because non-doms are investing millions of pounds every year. We have more to loose if non-doms go than we have to win.

Nigel Tuffnell said...

Non-doms employ lots of people, sure--in other countries. As far as the £ goes, nothing would please the Chancellor more than if it went down 10% and made the UK more competitive. As for inflation, forget it; there is none to speak of, according to official stats (ha ha). There is nothing to lose by getting rid of a load of wealthy parasites--and maybe the rest of us might be able to get a reservation at a decent restaurant then.

Nigel Tuffnell said...

To Panos

You cite the headline: Greek shipping industry set to desert UK
as a reason to keep non-doms. There has not been a UK shipping industry since the 1960s when the great builders started going bankrupt because of management incompetence and union demands. There is no UK shipping industry. Like I said, non-doms employ lots of people--just not here. Out with 'em.

Panos Konstantinidis said...

Well, the article says something else: "who run global businesses from a London headquarters". It seems to me that they run business from London headquarters and if you want to run your business from London you have to employ people... in London. And they are not the only ones. Thousands of non-doms run their business from here and gues what... they create jobs.

My opinion is that if all of them leave then you have a weakening economy and a weak currency. And a weak economy is what nobody wants. I'd rather have a job and not a house rather than the opposite.

Nigel T said...

Yes some non-doms employ head office staff (50? 100?). So what? The thousands of building jobs are in Greece (and the Far East). You won't have a weakening economy if the parasites leave; on the contrary, prices which have been bid way up for many goods (including housing) will come down--which will be great for those of us who actually live here full-time and don't just fly in and out in our Gulfstreams.

Panos Konstantinidis said...

Well I don't see it like this. House prices in Albania are also very low but would you really want to live there?

Besides that, all non-doms have to do is to pay 30K. Do you think this is a great amnount compared to the millions they are making? I really don't see how a tax of 30K to the non-doms would help me get a cheaper how.

Jien said...

As for the argument that they cannot work in the UK--that is an utter hoax

I am the one who said that, and there is no hoax; I specifically said *I* cannot work, and the UK visa in my passport says clearly that that is the case. There are other non-doms here on work visas doing their jobs, non-doms here as family members of working people, non-doms here under artist visas working on their art, all sorts of reasons. I would speculate without knowing that even refugees resident in the UK are not domiciled here.

I don't doubt for a moment that there are other UK immigrants who are running businesses in other countries from London HQ, and if that bothers you, fair enough.

My point is that just about anyone who immigrates to the UK will have their domicile in their home country (more technically their father's home country). Taxing non-domiciled residents differently than domiciled residents on overseas income is in my opinion pointless, but this isn't something the immigrants are doing to the UK; it's a matter of the immigrants following UK law. And now the UK is proposing changing that law to eliminate a large loophole for long-term residents, and it is high time that was done (even if I'm unhappy to have lost money I spent on tax advice by it).

But being hostile to non-doms is effectively being hostile to people living in the UK whose fathers were not British. That is casting a broad net, likely much broader than intended if the people you are angry at are the ones who make a lot of overseas money that the UK does not tax.

APL said...

Nigel tuffnell writes: ¨Your argument is specious.¨

Since this evening, I am full of the milk of human kindness, and perhaps a little more good Somerset cider than is good for me, I will simply say in reply.

You make one unfounded assertion, when challenged sidestep and make another assertion in conflict with the first. There is no logic to your argument nor anything that might be recognised as such by any reasonable individual.

One post ´non doms´ employ no one in the UK, the next they do but it doesn´t matter.

One post ´non doms´ are linked with all the home grown ills of British society, the next you didn´t make that connection but claim to have said something completely different.

One post ´non doms´ make no financial contribution to the UK economy, when it is shown that in actual fact some of them make a substantial contribution, the next post, well they do, but it doesn´t matter!

You have not produced one fact or figure to substantiate you assertions.

In short, there is little point in discussing the subject with you, a wrestling match with a ten foot python on the muddy banks of the Limpopo river would be more productive.