DBritain's Labor Party wants to toughen its plans to tax people with “non-dom” status if they win the election, which could generate billions of pounds of extra revenue for the UK, Shadow Chancellor of the Exchequer Rachel Reeves announced on Tuesday. He believes that tougher taxation of mostly wealthy foreigners could generate up to £2.6 billion in additional revenue for the government after a few years. In doing so, she wants to close the “loopholes” left by the ruling Tories.
Non-DOM refers to “non-resident persons” who are assessed abroad for tax purposes. Special tax status was introduced 200 years ago. It dates back to the days of empire and colonial empire, when British officers and civil servants were stationed abroad for long periods. Till date tens of thousands of wealthy people, especially foreigners have benefited from it.
In addition to tightening the “non-dom” status, Reeves wants to fight tax evasion. To this end, around 5,000 additional tax officers will be employed at the Tax Authority at a cost of half a billion pounds. The fight against tax evasion is expected to bring in around £5 billion a year for the Treasury by the end of the decade.
“Not Rocket Science”
Closing tax gaps caused by tax evasion is “not rocket science,” Reeves said. He promises £2 billion of extra revenue will flow into the NHS and school meals for primary school children. Current finance minister Jeremy Hunt decided to reform the controversial “non-dom” status in March. In future, it will be tax exempt in Great Britain for only four years.
According to the latest figures, there are 68,800 non-domes living in Great Britain. Of these, 37,000 chose special tax status, so they pay tax on assets and income abroad rather than in Great Britain. In Britain, the Tories have partially blocked Labour's demands by turning to taxation for non-finance ministerial positions.
The Independent Institute for Financial Research has urged caution, as many non-wealthy people could flee the country if restrictions are tightened significantly. Reeves wants to tighten control even more significantly. This includes that she wants to ask wealthy foreigners and expatriates to pay the full inheritance tax.
The ruling conservatives criticized Reeves' plans. Labor has no credible plan to fund the NHS and schools promises. Laura Trott, chief secretary to the Treasury, said Reeves had “no answer as to how we can fill the enormous black hole of his promises”. Labor generally wants higher taxes. The Conservatives have been criticized for their role as the tax rate has now risen to its highest level since the 1950s.
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