Missing a tirck ?

Following this week's clarifications changes to the remittance rules for non-UK domiciliaries, the Chancellor has refused to consider the calls for further consultation post 28 February; despite there being only the remotest prospect of the clarified draft legislation being made available by then. This refusal to consult further or, indeed, properly in the first place, is most probably because the Chancellor believes any further concessions clarifications will make him look even more weak and inept than his boss has already made him appear. But, it is hard not to think that someone is missing a trick here.

Academics are unhappy that a body of laws which have remained unchanged for some 90 years should be changed without anything resembling due notice and consultation. The fair share lobby are unhappy that the laws have not been changed to a sufficient degree. The non-doms are not happy at having been courted, implicitly or explicitly, with a tax concession which has now been varied with contempt and in such a way that more changes are expected to follow in a similar fashion. The doms are not happy at the suggestion that the economy may end up worse off, meaning that they will have to pay more tax themselves to make up the shortfall left by the exiting non-doms and their assets.

The only people who are happy are the foreign governments who are all busy laying out the welcome mat and poking fun at a the government of a country which has spent 20 years eschewing a change in the law only then to pick the worst possible time to make a change and, into the bargain, do it so badly. The imposition of a £30,000 hit on American citizens just at the time when many were already looking at the dual attractions of a change in administration and a weak dollar could quite possibly prove to be a fiscal pratfall of historic proportions with the entire Anglo American banking community heading back to New York and Chicago; quite how the UK government thinks it can negotiate with the US for its citizens to be able to credit the UK charge against US taxes, when the US has every incentive not to agree, remains a mystery to everyone except for Gordon Brown who must, presumably, have long since thought it all through.

But, with the majority view being that the currently proposed changes are not going to cause any material increase in the UK tax take in any event, why not indulge those calling for consultation or more stringent changes, and those who simply fear for the detrimental effect on the economy ? In short, why not now take the opportunity to seek an answer to the elusive question which has often been asked but never previously answered; the question of just how much foreign money will leave the UK, or not come into the UK, if the remittance basis is abolished altogether ?

This can be done by withdrawing the entirety of the proposed changes in their current form, and announcing instead that the remittance basis will simply be abolished. A consultation can be held for a year, under the auspices of a star chamber, preferably chaired by a senior retired judge, in order that transitional measures can be properly designed. The new laws will be enacted but, importantly, on a prospective basis, to take effect from some future date; let's say 2013.

In the immediate term, non-doms will be dissuaded from fleeing too readily for fear of the almost inevitable succession of further knee jerk changes, and we will get through the worst of the expected economic downturn. In the medium term, there will be a reasonable opportunity, over a few years, to monitor inward and outward investment flows and how the prospective new laws will be impacting on the behaviour of the non-dom community.

The whole process can be pinned on George Osborne, who remains noticeably quiet when it comes to claiming credit for starting the whole shebang. Any, and every, bad news story of money exiting the UK, or of the UK being unable to compete etc., can be spun against him, even where it is nothing to do with tax laws because, as recent months have shown, hardly anyone has more than the faintest idea what is really involved anyway.

If, closer to when the law takes effect in, say, 2013, the UK economy is on its knees through a huge outflow and failure to attract investment, the Labour party will be in a no lose situation. In the unlikely event that Labour is in power, they can repeal the law before it takes effect and blame the whole silly idea on George Osborne. If the Conservative Party is in power, Labour can still blame Boy George whilst calling on him to repeal the law and save the economy from the damage he has caused.

If, in the alternative, come 2013, the UK economy is doing just fine with however much, or as little, of the foreign money that remains in the UK, then we will finally have an answer to the much posed question, no one will have cause for complaint and no one will care anymore about whose idea it was all those years previously.