Wake Up, Gordon, Our Success Is under Threat; Powerhouse: A Sensible Tax Regime, Appropriate Regulation, Strong Infrastructure and a Deep Pool of Top Skills Will Keep the City Ahead

The Evening Standard (London, England), February 25, 2008 | Go to article overview

Wake Up, Gordon, Our Success Is under Threat; Powerhouse: A Sensible Tax Regime, Appropriate Regulation, Strong Infrastructure and a Deep Pool of Top Skills Will Keep the City Ahead


Byline: MICHAEL SNYDER

LONDON is one of the two fully global business cities in the worldthe other is New Yorkand this brings immense economic and cultural vitality to the capital and tothose who live here.

But now some fear that London's lead is in danger. And research that the Cityof London Corporation is publishing will give some support to the doom-mongers,indicating that our lead over New York in financial services has droppedsignificantly, a sudden reversal of previous trends.

That situation, and how London can stay ahead, is what Mayor Ken Livingstonewill be debating with several leading commentators tonight at the EveningStandard's debate on London's future.

London is a European jobs magnet, with all kinds of employment on offer for theeager and hard-working, irrespective of passport.

For the rest of the UK this prosperity and economic activity means that Londonis able to subsidise the other UK regions to the tune of about [pounds sterling]20 billion ayear. The financial services industry alonewith its heart in the City of Londoncontributes a massive 25 per cent of the Treasury's corporate tax take.

A reversal of this success is a grim thought, not just for them, but foranybody wholike melived through the 1970s and remembers the tired, grey, economically feebleLondon of those days.

Today more and more City leaders are worried about threats to the four factorsthat support London's business successa sensible tax regime, appropriate regulation, strong infrastructure and a deeppool of top skills.

For the City's global lead today is fragile.

This powerhouse industry is very mobile and the fear is that it might moveelsewhere if conditions are not righttaking a huge swathe of jobs and economic activity with it.

On tax, the City is, says our research, pretty aggrieved with politicians ofall colours, especially over the move to taxon their overseas incomethose well-off foreigners who live here as nondomiciles.

For years it was tacitly recognised by the main parties that it was in the UK'sinterest to attract those with the wealth and the skills we need and allow themto live here, taxed only on their UK income but on exactly the same basis as UKresidents.

Last autumn politicians of all parties decided it was not a case they couldmake to their own supporters and the wider public and that "non-doms" will nowprobably have to pay a large annual fee to keep the right to have theiroverseas earnings untaxed in the UK..

Obviously this is less of a problem for the independently mega-rich than forthose international knowledge workers on whom the financial City depends.

But to stop these prized individuals taking their talent to Geneva andelsewherea process which today's Standard report suggests may already be startingwe need major changes to the current proposals. The Government's concession onnon-doms providing information on offshore assets is welcome, but we also wanta much improved re-framing of the measures which, for example, would preventthe levy being applied several times in one family, would protect overseastrusts, ensure that US citizens can offset the levy against US taxes andestablish a minimum UK income level under which the levy does not apply.

Before consultation closes later this week the City will still be lobbying hardto achieve these and other changes. …

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Wake Up, Gordon, Our Success Is under Threat; Powerhouse: A Sensible Tax Regime, Appropriate Regulation, Strong Infrastructure and a Deep Pool of Top Skills Will Keep the City Ahead
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