Treasury select committee deputy chairman and Conservative MP Michael Fallon has hit out at his own Shadow Chancellor’s proposals for non-domiciliaries.
On the ConservativeHome website, Fallon said Shadow Chancellor George Osborne’s plans would be only slightly less catastrophic than Chancellor Alistair Darling’s controversial proposals for non-dom taxation.
Osborne proposes introducing a 25,000 annualflat rate charge on non-domiciled residents,with a guarantee that the Government would not change othernon-dom taxes for at least a Parliament.
He said: “Labour’s proposed tax would be disastrous for the City. It has sent out a clear message that, in seven years time, we simply do not want the non-doms here. But the real lesson of the non-dom row is not for Labour – it is for us.”
An annual levy combined with a guarantee of no intrusion is more attractive than Darling’s proposal, according to Fallon, but he believes that Osborne’s plans fall down because they only give certainty for a single Parliamentary term.
He said: “Non-doms who have chosen to work here are looking for certainty. They now see two policies, eachof which is a proposal. They worry that either party could tweak its policy again. We need to be careful aboutsoft targets, careful about taxing anybody just because we need the money rather than from principle and, above all, very careful not to do anything that might undermine the one bit of our economy that really works.”
In his pre-Budget report last autumn, Darling proposed a 30,000 annual flat rate charge for non-doms who have lived in the UK for more than seven years.
Last week, he retreated on some aspects of the reform, most notably ruling out retrospection on the taxation of offshore trusts and removing the requirement for non-doms to make additional disclosures about their income and gains arising abroad.