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Second, it is curious that his top end estimate at around £4 bn is remarkably similar to my own, admittedly now out of date estimate.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
27 Responses to “How much will the change in the domicile rule raise in tax?”
Guest
Oh yes, “stolen” cash by allowing foreign students, blah blah. Allowing movement of capital is to you “theft”, check.
And of course you don’t think the UK needs a decent education system, and we can do it the other way of downskilling, as you kick everyone out who does not meet your criteria of being a True Brit.
You’re talking about, in fact, siezing all foreign investments, making *sure* that the UK economy entirely collapses and we become a pariah nation. We then wouldn’t be able to afford football teams, and Harrods, like much of London, would have squatters in the ruins.
Default and misery is where you’d *start* with that kind of policy – other countries navies patrolling for escapees like from Cuba, then, and…
Faerieson
As the election approaches we are again being bombarded with reasons not to venture down the road of greater democracy. ‘Business leaders are happy with the coalition,’ we are ‘informed,’ ‘vote accordingly.’ ‘Let’s not properly tax the non-domiciles,’ we have been warned, ‘they might take up their wealth and leave.’
Perhaps we should just revert to the old feudal ways, and save the nation a fortune.
David Lindsay
I feel for the poor, confused Tories.
On the one hand, they want to defend an arrangement unique to Britain that enables you to inherit a tax benefit, but only through your father, and even then only if he was married to your mother, with the benefit itself being useless unless you happened to be seriously loaded on an international scale.
On the other hand, your father’s ancestor who first acquired that benefit has to have been an immigrant (originally, of all things, French), and the system has contributed to creating today’s London where part of the South of England used to be.
It is a true dilemma for the Tories. A very true dilemma indeed.
robertcp
I think that we agree on this issue.
damon
The ruling elites in China are totally corrupt. Probably a majority of Chinese students at British universities have parents who are involved in that corruption.
How else would they be able to afford it?
One of the first articles I found when I googled for this subject.
Meet The Chinese Luxury Shoppers Who Are Taking Over The World