Newspaper article The Evening Standard (London, England)

Taxing the Expats Would Be a Crippling Blow for City

Newspaper article The Evening Standard (London, England)

Taxing the Expats Would Be a Crippling Blow for City

Article excerpt


A DEPUTY Governor of the Bank of England once told me that only two things could topple the City of London from its pre-eminence as a global financial centre. One was an excess of regulation. The other was a stiffening of the personal tax regime, which would make London much less attractive to the thousands of expatriates who work in the financial sector.

The jury is still out on the first, and whether the combination of retail and wholesale regulation under one roof can be made to work remains to be seen, although thus far regulation appears to be as much a plus as a minus.

Yesterday, however, things took a notable turn for the worse on the second front when Gordon Brown confirmed in his Budget speech that he is looking again at the rules allowing people resident but not domiciled here to avoid tax on their overseas income. If the Chancellor follows through on his threat, it will be the most disastrous blow for the City since Labour returned to power.

A change in the tax status of nondomiciled resident individuals will devastate the London shipping business centred on the Baltic Exchange, cost thousands of City jobs, destroy London's position as the international centre for shipping, undermine its ability to attract key foreign personnel in all its other areas of activities and result in a lower, not a higher, tax take for the Exchequer.

When people talk about the competitiveness of the City, they usually refer to the number of foreign bankers and brokers who are happy to come here to work. These create the pool of talent that cements London's position as the leading international financial centre. A change in the rules will make them want to leave London.

There is nothing the Government could do that would give a bigger boost to Paris, Frankfurt and Zurich, the rival Continental financial centres. …

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