If there is a posture that will be indelibly associated with the Chancellorship of Alistair Darling — brief though it may turn out to be — it is that of a man forced into retreat under a hail of ridicule. Last month he backed away from ill-thought-out proposals to reform capital gains tax in the face of howls of rage from business owners. In the battle to recoup the massive exposures to Northern Rock to which, in panic, he committed the taxpayer, there has never been a moment when he has looked in full command, and retreat has taken the unusual form of digging himself into a deeper and deeper hole. Now, on the issue of taxing non-domiciled foreign residents, he has again taken several steps backwards — while still leaving himself, characteristically, in a confused and untenable position.
On Tuesday he bowed to a well-orchestrated campaign from the City and wriggled out of proposals to force non-doms into disclosure of income outside the UK, to slap retrospective taxes on gains in offshore trusts, and to tax them on artworks brought into the country. But so far he is sticking to his core proposal of an annual £30,000 tax on non-doms who have lived in this country for at least seven of the last ten years. In doing so, he is doubly mistaken: first, because there is no certainty the levy will produce positive income for the Treasury; and second, because it threatens serious damage, with much wider fiscal implications, to London’s position as a global financial centre.
But before we analyse those two issues let us pause, in the name of even-handedness, to heap a portion of reproach on shadow chancellor George Osborne, whose brilliant (indeed, Threadneedle-Spectator-Politician-of-the-Year-winning) tactical manoeuvres have been responsible for so much of Darling’s discomfiture.
Comments
Join the debate for just £1 a month
Be part of the conversation with other Spectator readers by getting your first three months for £3.
UNLOCK ACCESS Just £1 a monthAlready a subscriber? Log in