First, the tax break attracts wealth. The non-doms bring money into the country that otherwise would not be here. They have a wide range of places where they can live – being rich is useful like that – but when they choose Britain they bring money into the country with them. Without the special treatment that would not happen.
Next, it increases investment. Many non-doms are entrepreneurs or part of established commercial dynasties. Once they are settled in the UK they invest here as well, for the simple reason that most people pay more attention to stuff that is happening locally than thousands of miles away.
The UK ends up with more money flowing into its businesses (and often start ups, most of all) than it otherwise would. It would be crazy to start driving that away.
Finally, it is actually a nice little earner for Britain. The UK, and London in particular, is one of the best locations in the world for the globally rich to base themselves. The weather might be a little drizzly, but the bankers and lawyers are world class, and so are the theatres and restaurants.
It is an open cosmopolitan centre, not a tax haven. We bring in lots of global wealth, and those people pay some taxes, and we collect even more in VAT, council tax, stamp duties, and dozens of other levies. Overall we come out ahead.
Countries such as Italy and Portugal have been busily increasing their attractiveness to rich foreign residents. Our economy is not in such great shape that we can afford to casually destroy one of the few industries where we are globally competitive.
The revenues generated from wealthy foreigners have already gone down since we tightened the rules. Clamp down any further and they will collapse completely. The Treasury will have less money overall. It is hard to see how that helps anyone.
Of course, the Chancellor’s family should pay their taxes in full. No one would question that. But if Murty’s misjudgement means all the benefits of non-dom status are abolished, the UK will be a poorer country – and only our international rivals will benefit.
