May 19, 2024

Rich foreigners should lose special status

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.

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