London---A Labour government would abolish a "non-domicile" tax rule used by oligarchs, executives and many of Britain's wealthiest residents, party leader Ed Miliband is to vow on Wednesday weeks from a general election.
Miliband, whose Labour party is neck-and-neck with the Conservative party of Prime Minister David Cameron ahead of the May 7 vote, is to claim that the 200-year-old rule makes Britain an "offshore tax haven for a few".
The loophole allows about 116,000 people who are "non-domiciled" in Britain because they have their permanent home elsewhere to pay tax only on income brought into Britain, and not on earnings and capital gains made outside the country.
The Colonial-era rule came into the spotlight earlier this year during "Swissleaks", when leaked files showed many so-called "non-doms" had hidden their money in the Swiss private banking arm of HSBC and avoided paying taxes anywhere.
The "non-dom" status can be inherited through a father and therefore can apply to people born in Britain, and Miliband is to argue that tests to establish eligibility are not rigorous, according to pre-released remarks.
"The United States doesn't do it. No other major country in the developed world does it. No one would propose doing it now if didn't already exist. One rule for some and another for others? It is unjust, it does not work, it holds Britain back and we will stop it," he is to say.
"The next Labour government will abolish the non-dom rule. And we will replace it with a clear principle -- anyone permanently resident in the UK will pay tax in the same way."
Supporters of the rule have argued that it is positive for Britain because it makes the country more attractive to wealthy foreign investors.
In December last year, British Finance Minister George Osborne announced that "non-doms" resident in Britain for 12 of the last 14 years should pay a £60,000 ($89,000, 82,000 euros) annual levy, increased from £50,000.
Meanwhile, a new annual levy of £90,000 was introduced for people resident for 17 out of the previous 20 years.
"I want to preserve the non-dom status that makes our country attractive, but I want them to pay a fair contribution while having certainty about their future arrangements," Osborne said at the time.
AFP
