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British minister criticises government on non-domicile tax

By IANS

London : The British trade and investment minister said a controversial government proposal to tax foreigners who live in Britain but earn abroad could threaten London’s role as a world finance centre.

Lord Digby Jones, who recently led a large business delegation to India, criticised the plans to charge an annual 30,000-pound ($58,453) fee on the so-called non-domiciles, saying it made it harder for him to sell Britain as a destination for skilled foreign workers and inward investment.

He told the Financial Times newspaper that the tax proposal was considered to be a “serious issue” by the financial services industry in Britain, and added that he had been frequently asked about it on trips to India and the Gulf.

“It has caused people to say ‘Does this mean you don’t want us?’,” he said Thursday, warning that Britain may lose its “badge as the place to come and bring your skill and work hard in the developed world”.

“I can give you five reasons as to why you should invest in Britain before you go and invest anywhere else in Europe. But maybe there were seven and now there are five,” Jones added.

His comments come amid concerns that the tax would cause a flight of wealthy non-domiciles to countries such as Switzerland.

Jones, a businessman who was drafted into the government by Prime Minister Gordon Brown, said he had not been consulted about the proposals.

Non-domiciles were also worried about the possibility of greater intrusion into their affairs by the tax authorities, he said.

“It’s also a ‘How much do you want to know about me?’ bit, as well as the 30,000 pounds,” he said.

However, he said the fact that the 30,000-pound tax would only be effective after seven years of domicile in Britain meant the country would still remain an attractive place for young foreigners to live and work in.

“We’ve got to get the message across to these people that it’s seven years before this begins to bite,” Jones said.

The tax, proposed in October last year, is under a period of consultation at the moment.

The proposal followed a demand by the opposition Conservative Party, which says there are 150,000 wealthy non-domicile taxpayers such as Indian steel tycoon Lakshmi Mittal living in Britain, and that if each paid a tax of 25,000 pound, the treasury would be richer by 3.5 billion pound.

Non-domiciles do not have to pay taxes in Britain on account of a 208-year-old tax loophole. At the same time, an increasing number of them have been donating money to political parties. Of the 188 million pound s raised by all political parties from donations since 2001, 17.5 million pounds have come from the so-called ‘non-doms’. Of this sum, 8.9 million pound went to Labour and 5.6 million pound to the Conservatives.

Mittal, one of the world’s richest men, has donated more than 4 million pounds to the Labour Party.