Non-dom tax status: Labor tells Jeremy Hunt to ‘clean up’ economic perks
Ministers have been told to ‘clean up’ the economic argument for the decision not to scrap UK non-dom status, after the Chancellor suggested he didn’t know how many money the removal of the controversial tax status would pay off.
Jeremy Hunt has insisted the economy will not be helped by scrapping the controversial tax status, saying on Friday he would rather the super-rich ‘stay…and spend their money here’. And he said Treasury officials told him they were “very uncertain” how much money the move would actually bring in.
Labor has now called on ministers to release figures on the number of non-doms in the UK and how much the Treasury is currently losing through the loophole.
The highly respected Institute for Fiscal Studies (IFS) think tank said The Independent that his ‘best estimate’ was that abolishing the measure would cost around £3billion a year. The figure is roughly the same amount announced by Mr Hunt that will be added to next year’s NHS budget.
The Independent revealed earlier this year as Rishi Sunak’s wife, Akshata Murty, had non-domiciled tax status while her husband was chancellor. Mr Sunak called the reports about his wife at the time an ‘unpleasant smear’, although she eventually waived the benefit.
The issue was seen as so toxic that insiders initially thought it would dash Mr Sunak’s hopes of becoming prime minister.
Non-dom status, which is legal, can save an individual from paying UK tax on dividends from overseas investments, rents on overseas property or bank interest.
Calling on the government to produce figures on non-doms, Shadow Treasury Chief Secretary Pat McFadden said: ‘While the Tories are raising taxes on working people, it is simply not fair that those who are at the top can benefit from obsolete taxes on non-doms”. advantages. If you make Britain your home, you should be paying your taxes here.
He said Labor would ensure that “people who move to the UK contribute to this country by paying tax on their overall income”.
Labor also cited research produced by the London School of Economics which aligned with the figure suggested by the IFS, estimating the amount the Treasury could raise by scrapping non-dom status at nearly £3.2bn. pounds per year.
Earlier this year, the IFS warned that there was “very little evidence on the effectiveness of the non-dom regime in attracting and retaining high-value individuals”. But Mr Hunt argued that closing the tax loophole as Labor suggested would ‘damage the UK’s long-term attractiveness’.
The Chancellor has faced questions over his decision to keep the status at the same time as planning tax increases and public service cuts, which experts say would particularly hurt middle-income people. Mr. Hunt said Treasury officials had not given him solid figures on how much removing or reducing non-dom status would yield.
“They told me they weren’t sure of the numbers that were going around, as far as the savings were concerned,” he said. “Like me, they wanted to be very sure that they weren’t doing things that damaged the attractiveness of the UK. These are foreigners who could easily live in Ireland, France, Portugal, Spain – they all have these schemes. All things being equal, I would rather they stayed here and spent their money here.
Asked whether the Treasury had given him a figure on what the abolition of the statute would yield, the Chancellor replied: “No, because we do not agree with the figures that Labor have given. The Treasury didn’t tell me that it was going to help the economy do this; that’s why I chose not to.
“I won’t do anything that can damage the long-term attractiveness of the UK, even if it gives easy blows to opposition parties. I think that would be the wrong thing to do in terms of job creation in the UK.
Labor has pledged to abolish non-dom tax status and replace it with a system similar to those in Germany and Canada, where temporary residents are allowed to avoid paying national income tax at home. ‘foreign. Shadow Chancellor Rachel Reeves accused Mr Hunt of endorsing ‘tax-free income for millionaires, while millions face frozen tax breaks and municipal tax hikes’.
In an apparent reference to Mr Sunak’s house, she added: ‘How can he pretend it’s fair? He refuses to act, and I wonder why. This is perhaps the only policy he cannot get No 10 Downing Street to sign. I say, if you make Britain your home, you should pay your taxes here.
A Treasury spokesman highlighted Mr Hunt’s comments that scrapping the statute would be ‘the wrong thing to do in terms of jobs and prosperity for the UK’.
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