Does anyone know the answer? If the news coverage today is anything to go by the answer is no.
An extract from a 2012 FOI request reveals that in 2011/2012, 44,500 people elected to be taxed on UK income and gains but not on overseas income or gains unless they were remitted to the UK.
This group paid a total of £6.8bn in UK Income tax and CGT, or around £150k each.
The cost of the non dom privilege has risen progressively for those in the UK for 7 or more tax years, ranging between £30,000 and £50,000 for 2014/15. Finance Bill 2015 increased the £50,000 charge to £60,000 and introduced a new £90,000 charge for long term non doms. This is in addition to tax payable.
It appears the total numbers reporting as non dom for tax purposes are falling, from around 140,000 in 2008 to around 100,000 in 2012.
What else do they contribute?
According to research commissioned by Stonehage in 2010, non doms spend more than £19bn in the UK each year.
A study by the City of Westminster estimates that owners (many non doms) of London trophy mansions spend some £2.3 billion a year on improvements to their homes, in shops and restaurants and on employing staff.
Far from providing no benefit to the UK economy the report suggests that owners of homes worth more than £15 million spend an average of £4.5 million a year in London while those in the £5 million to £15 million bracket spend £2.75 million annually.
So withdrawing the remittance basis of tax may bring some new gains and income into the UK tax net, but this will very likely be offset by fewer non doms coming to Britain and some of the existing non doms leaving.
My guess would be on balance there will be a net tax loss as there will be plenty of takers looking to induce the non doms to move. But it is a guess, no one knows what the actual impact will be.
Where would they go?
Probably Dubai, Hong Kong, or Singapore. There are other choices nearer to home; France, Portugal and Switzerland all have some kind of preferential tax schemes for new high value residents, as indeed does Jersey.
So what would the impact be for Jersey and it’s finance industry? On balance, probably not that great. For some private wealth managers who have concentrated on this market there would clearly be an impact. But the non dom market hasn’t been growing in real terms for years and the emphasis of the trust and private wealth industry has been firmly on non tax related matters for many years now.
Only around 12% of our business relates to non doms, and those who stay in the UK will not want to disturb long term arrangements due to the costs involved, they will just pay the tax. Those who move from the UK will likely continue to enjoy some kind of beneficial tax status and will have no motivation to revisit their arrangements in Jersey.
The bigger worry is for the City of London. Will it be able to maintain its dominance as the worlds leading financial centre, attracting talent from around the globe, partly by promising not to tax for a second time, non UK gains and income, on which tax has already been paid to another country. Only time will tell.
Those politicians who attack the foundations of the UKs international competitiveness will likely win votes, after all it is hard to defend a tax privilege benefitting long term residents that passes generation to generation.
The short termism inherent in undermining the UKs international attractiveness, (it already raises more tax from the wealthy than almost any other country), is masked by promises to unlock vast new sources of revenue, painlessly spiriting away those irritating fiscal problems, an intoxicating prospect for any politician.
The problem with this quick fix promise is that no one, including the proposers, have any idea if it will actually work.