This is not only a big step forward for tax and social justice but will give the Treasury a boost
My fellow left of centre tax professional blogger, Jolyon Maugham QC, has had a stab at estimating how much a change in the domicile rule will raise in tax for Labour, having firstly ignored and the annulled for behavioural changes. His blog is here and I recommend reading it in full. He concludes:
If I proceed from the above and stick a finger in the air – an exercise that you’ll have to take it from me is not so dissimilar to that which Treasury does when it forecasts the effects of tax measures – where do I get to in terms of yield? I’m not an economist – and the data is poor. But my instinct is that the stage one theoretical yield figures will tend towards the top end – towards the £4bn end – of the spectrum. But I also think 25 per cent is rather low as a behavioural effect: 50 per cent or even more might well be more realistic, depending on the detail of Labour’s measures. But that would still leave a yield well north of £1bn.
First, Jolyon is spot on about what the Treasury does.
Second, it is curious that his top end estimate at around £4 bn is remarkably similar to my own, admittedly now out of date estimate.
And third, after allowing for behavioural change we both estimate revenues of more than £1 billion.
Now, I am not saying that because Jolyon and I agree means we must be right, but we have not conferred on this issue and come to broadly the same answers. I think that is useful indication, at least. And neither of us believe that the behavioural changes will be of anything like the scale some will be claiming today. Indeed, they will be very far from it: I suspect remarkably few people will be leaving the UK as a result of this.
So without offering guarantees, I think we’re both saying that this is not only a big step forward for tax and social justice but will also give the Treasury a useful boost. No wonder it is on several newspaper front pages this morning.
Richard Murphy is the director of Tax Research UK
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27 Responses to “How much will the change in the domicile rule raise in tax?”
badders
How much will it raise if the non-dome leave th UK for Switzerland etc? What will happen to their cleaners, waiters, drivers, gardeners etc?
GTE
What will happen is that non doms put their cash into companies. Then they will earn what they spend, if they draw it as income. If they spend capital, you get nothing. The result is bugger all tax.
Non doms have already moved to the UK for tax reasons, and as economic refugees from kleptomaniac states that want to tax tax tax because they have massive debts.
What makes you think they aren’t good at playing the game?
Why do you think Branson has bailed out of the UK?
robertcp
I assume that the change will raise about £1 billion if many non-doms leave and about £4 billion if most of them stay. It will be unfortunate if their employees lose their jobs but presumably they would be looking for another job in any case. Somebody who leaves the country to avoid paying taxes is unlikely to be an enlightened employer!
Cole
A wonderfully Downton Abbey posting. Are you George Osborne?
damon
I’d just send them a huge tax bill and tell them to pay it or leave.
It’s what they do in the States I believe, and many have left.
There’s far too much dodgy money and people knocking about in London.
And kids at universities and private schools who are from the corrupt elites of the third world.
People like Said Gaddafi who went to the LSE.
Why force British students to sit in class with people like that?