Last Sunday, I was invited by the BBC to join the Big Questions program at 10.00 am with Nicky Campbell in Salford Quays, just outside Manchester , to debate raising the top rate of taxation to 50% or above. We were told to be in Salford the night before, so I travelled by train from Euston, had supper in the Beefeater and stayed in the Salford Quays Premier Inn, curtesy of the tax payer.
It is not easy to prepare for such a debate, because it is hard to predict in which way the debate will go and to spout a prepared piece is not in the spirit of a debate. A lot of what I wanted to say, was not possible, and much of what I did say was not planned – hey, ho!
Nicky asked repeatedly those in support of raising the rate of taxation, whether it was a moral issue, or whether they thought that by raising the rate more revenue would be collected. He had the facts and statistics about the experience in France, when Hollande raised the upper rate to 75%; the deficit was EU 80 billion and the revenue only EU60 million. Most speakers in favour of a rise did not answer this question directly.
Nicky introduced me as someone who would not wish to see the rate raised, in fact I said I would like to see it lowered. I pointed out that the super-rich do not need to pay the higher rates – by changing their behaviour.
If they are non doms, they can keep their monies abroad, or if they are an entrepreneur they can keep their money in their company, thereby avoiding the higher rates of tax. It will then only be the employed and the pensioner who will pay the higher rates of tax. Personally, I do not think this is fair.
I am all in favour of billionaires paying taxes, but we should not approach them with a hammer if we wish to fish for their business. My personal view is that we need to make our tax system attractive for billionaires to come to Britain, and to bring their billions with them. Why do we have a tax system which attracts billionaires to live in the UK, but yet encourages them to leave their billions stewing in Switzerland. Why not extend the reliefs to billionaires who bring their trusts to the UK? I have done my little bit through HighTrust International an onshore trust administration business. There are several tax advantages to having a trust in the UK and many practical reasons as well, but the Government could do more to attract billionaires’ and their billions to Britain.
Despite the best efforts of Gordon Brown to stamp out avoidance, there are still so many reliefs and easy ways the super-rich can avoid paying tax. I made the point that currently corporation tax is set at 19% and due to go down. This is great for businesses which are seeking to locate to Britain, where it is safe and secure to do business. The UK has a fantastic and experienced workforce, an excellent and fair judiciary, and it is a great place to live. But with the tax disparity between 19% corporate tax and 45% as the upper rate of income tax, the temptation for those who own a business to keep the profits in the company, is just too great. If they do not take the profits out as income, they will not then spend, and if they do not spend they are not supporting British Businesses and the country will not produce the revenue the Treasury is hoping for
From my experience of billionaires, they only hoard their wealth in their investment management company from which they invest direct into projects, many of which have social impact as one of the primary objects whether in sustainable energy, energy savings, or pharmaceutical advances. They use their money to fill the gap in funding which financial institutions cannot.
The comment made by Alex Wild of the Tax Payer’s Alliance was well made. In reality employees or shareholders are already paying 50% tax if not more, when taking into account the National Insurance, Pensions Contribution and the inequality of franked investment income. Sadly, although true, it is not understood by many journalists and so this fact is often overlooked.
Thank you Nicky and your team for inviting me to the debate. It was an honour to take part. May I also thank all of you who took the time to watch, and as always I welcome your comments and feedback.
Watch Caroline on The Big Questions
Read more about the UK Trustee Services we offer
Contact : svetlana@garnhamfos.com
020 3740 7423
Caroline’s Book ‘Who can you trust when you are Super Rich?’ can be bought on Amazon and her book ‘Winning Business from Private Clients’ can be bought direct from the website or from Svetlana.