Non-domicile tax dodge row erupts again
The row over tax avoidance by “non-domiciles” has erupted again, this time over the man who must be the richest would-be Tory MP, Zac Goldsmith. As always, the subject opens up a rich vein of twaddlespeak. The Guardian editorial writes, “This is not, as the Conservatives say, a minor and private matter. It exposes an obvious hypocrisy: that while the party preaches austerity, in practice that may mean austerity for everyone other than the rich. In his defence, Mr Goldsmith says he intends to change his status next year, and that he does pay tax in this country on his UK income. But that is not sufficient. Voters have the right to expect every Conservative candidate to meet their obligations as citizens.”
Labour had 12 years to reform the tax system in a way which would have made tax avoidance impossible, but completely failed to do so.
The tax system has been broken for decades. People are mobile. Corporations can exist in multiple locations and profits can be made to pop up anywhere. Funds can be transferred round the world at the click of a mouse button. In such circumstances, it is folly to tax people or companies.
On the other hand it is very easy for the tax authorities to get their hands on that stream of income known as the economic rent of land, since payment can be a condition of continued holding of land title. Since most of the larger incomes and profits consist ultimately of economic rent of land, the taxation of this revenue stream tackles the problem at source.
What Labour ought to have done was to initiate the necessary reform but they did nothing. Of course the Tories will do nothing since their paymasters are the main beneficiaries and do very well out of leaving the present soak-the-poor system as it is.
Once in a generation the country gets the opportunity for reform. Yet again, Labour let it slip by. We are now on course for the aftermath of the crash, which has still plenty of stings left in its tail, and the country will then be on its way to the next boom and bust, probably around 2027.