With the campaigns for the general election now in full swing we have hit that particular period where any given party will propose anything in order to sway potential voters. For the last few years that has been mainly the Labour party and just this week we have had Red Ed stating that ‘non-dom’ status would be abolished under their rule.
I will tip my hat to Miliband for exploiting and manipulating an issue in the media that is not necessarily straight forward for the everyday person to grasp. Whenever we have a proposal, such as the non-dom tax from the main parties, I always consider the effect it would have on my field of work – the shipping industry.
London is the biggest shipping hub in the world and is home to where the shipping trade all began many centuries ago; the Baltic Exchange. Ask any politician ‘what is the Baltic Exchange?’ and they will more than likely struggle to answer or even be aware of it. The contribution it provides to the UK economy is huge and many within the sector are non-doms.
The Baltic Exchange was very quick to blast the Labour plans. Chief Executive Jeremy Penn, said ‘far from costing the UK economy hundreds of millions in tax revenues the availability of tax concessions to non-domiciled residents in fact contributes hundreds of millions as many business people choose to reside temporarily in the UK and pay tax on their UK income, while contributing substantially to the UK economy’.
I think its worth considering what a non-dom actually does pay in the UK. They are subject to normal UK income tax on their UK incomes, whilst paying a very large lump sums (up to £90,000) to enjoy such status. One can see immediately that this is far more considerable than your average British person will pay in tax. All income generated overseas is subject to that jurisdiction’s local tax laws. So why would it be fair for the UK government to double tax these overseas incomes?
I would like to point out in particular No. 6, John Fredriksen ($9.25bn). He is known as ‘Big John’ in the shipping world and widely perceived as the most powerful man in the industry. I suspect most people that read this article will have never heard of him. But his tankers are moving huge volumes of Arabian crude oil to meet global demand.
He owns a wide portfolio of large shipping companies that employ thousands of people and that generate incredible revenues. If his non-dom status was to be threatened he will not bat an eye lid at upping sticks and moving out of the UK, taking his business interests elsewhere. He has done it before, and he will do it again.
Quickly looking at other names on the list, I can see other shipping names such as Lakshmi Mittal, Nicky Oppenheimer and Idan Ofer. Not to mention Sir Richard Branson who has very grand active plans to enter the cruise industry. Shipping is a prestigious and very unique industry. The assets are offshore and without them the world would stop turning. 95% of all goods in the world (raw resources, food, consumer goods etc) are transported by ships. Let that sink in…
Other business sectors have called the plans ‘cataclysmic’, whilst footage of Ed Balls has emerged doubting the logic of the plans earlier this year. If you lose the trust of the business world, then you are going to lose an unimaginable amount of government revenue and countless job losses across the country.
Ed & Ed, please wise up.
By Tristan Allen, Junior Writer for Daily Political View.