New non-doms tax ‘threatens to topple the City’

A global survey of finance chiefs commissioned by the City of London Corporation found Britain is becoming less attractive to overseas business.

In a further blow, Harvey Nichols said it was poised for a drop in sales because wealthy foreigners were preparing to quit the country over the £30,000 levy the Government will make
them pay from April.

Yesterday was the last day for submissions to the Treasury on the plan to charge non-doms. Under Chancellor Alistair Darling's proposals, they will
have to pay £30,000 a year if they want their overseas income to remain outside the British tax net.

Many Asian, Greek and Russian millionaires are said to be considering moving to Switzerland and elsewhere to avoid the levy. City leaders have
already warned that the proposals, which also include a crackdown on offshore trusts, will provoke an exodus of foreign investors and professionals who have contributed to London's pre-eminence as a financial centre.

High-end stores such as Harvey Nichols depend on big-spending customers such as these for their success, Retail Week magazine reported.

The worldwide survey is called the Global Financial Services Index and is compiled from questionnaires completed by 1,200 financial services workers.

Cities are rated on property costs, regulation, tax, skilled staff, responsiveness of government to business needs, and quality of life. When all
responses since the start of the survey 18 months ago are counted, London remains the leading financial centre, with 795 points to New York's 786.

But when only the 411 responses received since September are taken into account, New York scores
46 points higher than London.

Offshore centres such as Jersey and Guernsey had become more competitive, as had Shanghai, Dubai, Qatar and Bahrain, the poll found.

Another survey, also commissioned by the City, found business leaders in London believed the British tax system had lost its competitive edge
because it was increasingly unpredictable, complex and aggressive against the wealthy.

Ireland, Switzerland, the Netherlands, Bermuda and Singapore were judged to be more attractive.