Afternoon:
10°c
Phew! My email inbox has calmed down, the phone isn't ringing quite so frequently. The friends of the non-doms seem, finally, to have fallen silent.
It's probably only temporary and on reading this they'll rear up again, but I can't recall an occasion when I've been subjected to such intense lobbying - I could swear that everybody of any merit in London enjoyed this exalted tax status, such was the importance attached to getting the non-doms off the hook.
Cutting through their indignation, it was obvious the Government had made a profound mistake.
For Alistair Darling to call his climbdown a "clarification" and a drafting slip was grotesque - not only has he lost the trust of the country after his shambolic start but it's hard to imagine how his officials and colleagues can have any faith in him. He's clearly one senior minister who is not prepared to take the rap.
What now? Having set out to implement tax reforms, the Government has been forced to beat a hasty retreat, not once but twice, on capital gains and nondoms.
We should not suppose, however, that just because Darling didn't succeed with his proposed changes that the status quo is perfect. It isn't - the UK has the most complicated tax regime in the world.
The current edition of Tolley's Yellow Tax Handbook, the definitive guide to the tax system, runs to four volumes and has 40% more pages than the 2001 version - it has a total of 9866 pages compared with 5952 pages in two volumes in 2001.
This is absurd.Yet at every step, Gordon Brown and his faithful servant, Darling, have appeared more intent on adding to it than subtracting. But, having been sent packing, now is the moment, surely for them to step back to look at what it is, after more than a decade in power, they're actually trying to achieve.
What is required is a wholesale (I nearly slipped into New Labour vernacular and said "root and branch") overhaul of the tax regime.
They should take a red pen to the myriad convoluted allowances and get rid of as many as possible. Income tax should be flat - 20% over £10,000. What we need to tax as a society is consumption - so raise VAT to 20% and to 25% on goods over £50,000 so it hits the rich. We're spending (and borrowing in order to spend) far too much and not saving enough. Investments should be made free of capital gains.
We should take a look at the United States and Ireland, where lighter taxation has produced a rise in GDP. To get round the problem of the "for cash" economy, Darling could make the provision of services under £200 VAT-free. Small businesses would get a huge lift and we would stop the charade that is played out with every builder, decorator and plumber in the land.
But a simpler code should be accompanied by a regime ready to crack down. Have you ever witnessed the reaction of an American when they mention their own Internal Revenue Service? You can almost see a shadow pass over their eyes. In the US, the tax yield has been rising. Why? Because they do not stand for any nonsense from anyone.
Draconian penalties coupled with a rigorous inspection system have virtually eradicated tax dodging in the US. No one will dare risk it.
Avoidance, too, is not the industry that it is here. We could do the same - the Revenue staff freed up by simplification could move across to collection.
If Darling wants to be remembered for anything other than the Northern Rock, missing computer discs, capital gains and now the non-doms fiascos, he should tear up the books and start again.
