At a time when the gap between the super-rich and the rest is increasing, the government’s decision to scrap its new tax plans for high-earning foreign workers is a further indication that when it comes to a choice between the wealthy few and everyone else, the wealthy come first.
Labour’s promise to close the loopholes that allow non-domiciles to pay lower rates of tax, like so many other promises, has failed to materialise. Once again Labour has bowed to the super-rich. Instead of doing the right thing and creating a more progressive tax system, they have abandoned plans to tax non-domiciles following pressure from big business and the media.
At the moment people can live in Britain, without being official residents, and therefore pay less tax. They are making use of our infrastructure and public services, without paying for them in the same way that the rest of us do. This has resulted in the richest 50 billionaires in the UK paying an average of 1.5% tax.
Alistair Darling announced that the government would introduce a system whereby non-domiciled workers would pay a £30,000 fee, upon having lived in Britain for seven years. Labour said that it was essential that earnings were revealed so that it could be decided if people were paying the correct amount of tax. It seemed that for once the government was moving towards a fairer tax system. But, following a few over-exaggerated claims that there would be a mass exodus of businessmen, once again it is the rich who will be paying less tax.
In a cowardly turnaround the plans have now been scrapped. Non-domiciles will pay no tax on their foreign earnings, will not have to disclose income from offshore accounts and there will be no £30,000 fee.
Do people seriously think that someone worth over 1 billion pounds will decide to relocate due to a £30,000 charge and taxation on their foreign earnings? “It’s time to leave this despicable country, dear. I can no longer afford that trip to Mars we were planning.” The fact is these new tax measures would have had little impact on the numbers of foreign businessmen living in the UK, while raising money for the treasury and going some way to slowing down the increasing wealth divide. This extra revenue could have been used to pay the police force what they deserve. Perhaps the government could have used it to fund rural schools which face closure or increase the money spent on flood defences. Even more radically they could have lowered the tax burden on the poorest workers.
Furthermore, it would have sent out a serious message that politicians have a social conscience and are ideologically strong. It would have shown that there is a party that wants to help the millions of people struggling to cope with rising inflation through fairer taxation and it would have made it clear that the rich and powerful cannot sway government policy.
Unfortunately we are seeing a shift to a political system similar to that of the United States, where studies have shown that the views of the rich receive about 50% more weight than those of the poor. People are turning away from politics, not because they don’t care but because they can’t see anyone fighting for them. The difference in voter turnout between the highest social class and the lowest is greater now than at any point since the abolition of property requirements, reaching 17% in the last General Election.
Since Gordon Brown moved into Number 10 he has presided over mistake after mistake. Yet, if Labour would begin to speak up for the less well-off, he could still win the next election. Taxing the super-rich would have been a good start, but once again he has made the wrong choice. The government may feel comfortable knowing that the criticisms of the rich few have been silenced. The majority of voters, however, will feel alienated by this latest policy u-turn, leaving the rich to get richer and the rest of us falling further behind.
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This post was written by Matt Genner