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Labour tax plan to squeeze wealthy

Wednesday, April 08, 2015 - 02:11

Labour leader Ed Miliband says he will end tax rules that allow the wealthy to reduce the amount they pay the government on money earned overseas, if elected in May. But changing the centuries old law could prove both popular and controversial, as Joel Flynn reports.

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What is fair taxation? That's the perennial question facing politicians - especially come election time - and it's one Labour leader Ed Miliband has thrown right into centre stage. He's said he plans to close a controversial loophole for wealthy individuals with earnings abroad. SOUNDBITE: Labour leader, Ed Miliband, saying (English): "Why should people be able to enjoy all of the virtues of our great country and not pay tax like everyone else. Why should there be one rule for some people and another rule for everybody else. It isn't fair, it isn't just, it holds Britain back and we will stop it." So-called "non-domiciled" residents are currently allowed to avoid paying income tax on money made outside the UK. The problem is that some use the rule to avoid more than they should. It's been in place since the 18th century, but modern proponents of it say some tax on those based off shore is better than none. Not everyone in London agrees though. SOUNDBITE: Auditor, Chantal Badenhorst, saying (English): "It's ridiculous. Like it's legal, but I feel like they're avoiding tax." SOUNDBITE: IT Consultant, Mark James, saying (English): "If the parties in question are clearly residing in this country, spend a certain number of days per year working in this country and work for a company that's based here, then clearly their earnings are in the UK." SOUNDBITE: Electrical engineer, Delroy Campbell, saying (English): "Whether its tax or whether its law, or whether its a rule that you create, there's always someone looking to find a workaround." Labour hope this could be one policy that will help them get elected on May 7. But in a BBC interview with Ed Balls in January, the shadow finance minister suggested it might not necessarily be a good idea. The Tories meanwhile have called Labour's plans "a shambles". Breakingviews' George Hay. SOUNDBITE: Reuters Breakingviews' Columnist, George Hay, saying (English): "It's not going to be very difficult for the richest people in the world to decamp somewhere else. However I would say the bottom line is it is a good idea, because at the end of the day where are these people going to go, because it's a global thing, it's a global kind of reaction against tax avoidance, even legal tax avoidance." They might have had a couple of hundred years of tax incentives. But now non-doms in the UK could be running out of time.

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Labour tax plan to squeeze wealthy

Wednesday, April 08, 2015 - 02:11