Tonight:
5°c
Chancellor Alistair Darling got a very rough time when he was speaking in the City on his tax proposals for non-doms. He may still not get the point, but the view in the Square Mile is that this is becoming a very serious issue.
It has taken a while for the momentum to build, because when the issue originally came up last autumn, as a proposed £30,000 levy, it was widely thought to be easily affordable for most of those affected. But since then two things have happened.
First, when the proposals were fleshed out last month, they included a demand that the non-doms should declare everything they own overseas - a totally unnecessary requirement if the intention is only to levy a £30,000 charge. This has, therefore, aroused the deepest suspicions that it is the thin end of a bigger wedge.
It has caused particular alarm in the shipping community. Already one shipowner has moved his office to Geneva; more seem sure to follow.
The second issue is that these proposals bite much lower down the wealth scale than at the multi-millionaires they were alleged to target. As was detailed here before Christmas, they are particularly hard on Americans. This is because these charges are not recognised by the US tax authorities, so cannot be offset against the tax Americans have to pay on their worldwide income. It makes Britain a seriously unattractive place for them to work.
In normal circumstances, one would expect the Opposition to be tearing the Government limb from limb over an issue such as this. Unfortunately, the daft idea came from the Tories in the first place, and Labour stole it so they have sat there in embarrassed silence.
The City and the country deserve betpastter than that. They need to find their voices while there is still even a slim chance the Government will see the error of its ways.
Meanwhile, the Swiss cannot believe their luck, and are doing all they can to entice the disaffected from London. They understand, even if the Chancellor seems not to, that once gone, they will be impossible to entice back.
SOME takeovers really do work. When Aviva bought Amerus in the United States a couple of years ago, most people were not paying attention. But, rebranded and with the Aviva balance sheet behind it, Amerus has been transformed.
When the group, best-known in Britain for its Norwich Union brand, today published new business figures for 2007, it delivered an impressive overall growth of 25%. The result owed a lot to the success in the US.
However, it has steered clear of other acquisitions. One of the astonishing features of the insurance sector in the last few months has been the implosion of Friends Provident since its failed attempt to merge with Resolution. It seems to have lost the will to live, is breaking itself up and it seems probable that a bidder will put it out of its misery soon.
But that is unlikely to be Aviva for no better reason than it is already a market leader in the UK and, given that it is a competitive and not particularly profitable market, it does not want to spend a lot of money getting even bigger. It sees a much better use for its capital in other, faster-growing markets.
When Andrew Moss took over as chief executive, he recognised that the group had become pedestrian and needed to re-energise itself to start making some serious money. Business transformation and cultural change take a long time, and it is too early for a serious comment on how it is going other than to say he has made an impressive list of management changes and it looks good so far.
It is perhaps notable that, probably for the first time ever, every serious market in the world is showing a bit of growth. But it is also the case that Aviva still has to prove that it can wring the performance out of the many good
businesses it has. A credit crunch rolling round the world can only make that tough job even more challenging.
THERE was an interesting postscript to yesterday's story about how tax increases and housing costs have made the average family significantly worse off since 2004.
Tesco chief executive Sir Terry Leahy, delivering a lecture at Lancaster University in honour of the late business academic Professor Sir Roland Smith, illustrated how much worse it would have been were it not for businesses such as his own. He said price deflation and competitive efficiency has saved 30% - or £4954 per typical family - on the average Tesco shopping bill for customers since 1997.
He also said his firm creates one job every 20 minutes - more than 260,000 since 1997, of which more than 126,000 were in Britain. And it has paid £3.5 billion in taxes in the last decade.
Reader views (1)
How morally bankrupt. To suggest that it's okay for the super rich to pay a vastly lower proportion of their earnings in tax than the poor and middle class.
- Rex Pointon, London, 07/02/2008 15:08
Report abuse
