Saturday, 9 February 2008

Time to go

Digby Jones, the trade and investment minister, is worried that non-domiciled foreign residents will disappear if the government has the temirity to ask them to pay taxes. Personally, I hope they do go. Tax them now; hit them hard; and send them on their way. The UK economy would be better off without them.

There is a widespread misconception that the UK profits from being a global financial centre. Travel north of Marble Arch and there is very little evidence of any benefit. On the contrary, it is clear that the City distorts the economy to the detriment to the vast majorty of its citizens.

Housing is an obvious distortion; the huge influx of wealthy tax-shy foreigners have pushed up prices. In central London, a conventional three bedroomed home is unaffordable for any wage earner. Not even our expense-inflating MPs could afford to buy a home today in Westminister.

The exchange rate is a less obvious distortion. The huge foreign exchange inflows generated by the city pushes up the value of sterling. Our overvalued exchange rate has hindered the growth of other sectors of the economy. Manufacturing is the obvious example; only one person in ten in the UK actually makes anything today.

If the non-doms fled to Switzerland, it might knock off a little from GDP growth. However, the benefits would be enormous. Ordinary people could reclaim our capital, housing prices would moderate, and we might create a healthier, more diversified economy.

1 comment:

F. Frederson said...

"On the contrary, it is clear that the City distorts the economy to the detriment to the vast majorty of its citizens."

Word.