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So Guy Hands and a bunch of City tycoons are “fleeing London” to escape Gordon Brown's crisis tax increases.
Their gold-winged chariots are hovering over Monaco, Switzerland, Jersey and, in Hands's case, Guernsey, before deciding on which graciously to descend.
Fiscal fugitives argue that they can run such concerns as, in Hands's case, Odeon, EMI, Angel Trains and Phoenix Inns from anywhere in the world. “So why should he pay more tax,” said a friend of Hands, “when he could move to the Channel Islands? It doesn't really matter where he lives.”
Most Londoners will find this not so much outrageous as sad. I cannot think how much money I would have to be paid to be exiled from London. The idea of doing it to save money would suggest abject poverty.
The point of living in the metropolis is not to earn money: the point of earning money is to live in the metropolis. As Dr Johnson said — or should have said — the purpose of wealth is to be able to afford London.
Hands and co are not being driven from the fiscal torments of Mayfair and Belgravia as if from the dried-up wells of Darfur or the Taliban of Swat.
He cannot in any meaningful sense “need” more money. He is punishing himself to get his own back on the Chancellor, cutting off his nose to spite his face.
I know Guernsey, being one quarter a native of the island and having holidayed there as a child. It is the loveliest in that sunny Channel archipelago. But it is not a bundle of laughs, let alone a hot night out.
Indeed some would find its tax-exile expatriate community desperately dull. Guernsey is Marbella for slow learners.
Such fiscal bolt holes in micro-states enjoy all the benefits of European security, travel and cheap labour yet contribute to none of the costs that come with them, such as social benefits for immigrants and the de‑industrialised poor.
As for the new exiles, it is hypocritical that a profession which did most to bring about Britain's economic crisis — and thus the need for higher taxes — should howl at those taxes and flee the country.
Of all the people who should pay up, it is the arbitrageurs, bonus-merchants and wide boys who landed us in the mess.
Yet the Treasury will let them laugh all the way to an offshore bank. Guernsey, like the law and the Ritz Hotel, are open to all. If City dealers can dodge British taxes in Guernsey, why not on the Isle of Wight or in Cornwall?
And why should an island whose chief local industry, finance, so benefited from the City boom, be excused the taxes that must pay for that industry's rescue? Why not declare the Isle of Dogs a tax haven and have done with it?
Admittedly Hands lives in Sevenoaks, not London, but his decision is a poor comment on that town and suggests scant commitment to his community.
I am mystified by the cast of mind that can up sticks and move home hundreds of miles offshore because of a marginal change in income tax. For someone “not to care” where he lives implies a vagrant lifestyle, wandering the fleshpots of the wealthy, rootless and detached from neighbours, family and friends.
Once upon a time such Ovidian exile was considered a fate only one step short of death.
I sense these things are an amalgam of greed, status and a restless cast of mind rather than a specific response to a particular tax rate.
When Geoffrey Howe cut the marginal rate from 83 per cent to 60 per cent in 1979, people like Hands flocked to London to make money. There followed a boom in the 1980s, whether or not because of the tax cut nobody can know.
Nigel Lawson's further top-rate cut to 40 per cent in 1988 was widely considered reckless and unnecessary — including by his boss, Margaret Thatcher, who favoured the 50 per cent now introduced by Brown.
Forty per cent is one of the lowest top rates anywhere, especially as, unlike in most countries, there is no local income tax top-up in Britain.
Yet the City is claiming as a “disincentive” a marginal rate 10 per cent lower than that prevailing at the time of the (60 per cent) Big Bang of 1986.
Just now it is moot whether London's most lucrative industry will ever recapture the lushness that its financial services gave it until last year.
The way into London from Heathrow is lined with empty office blocks and garish For Sale signs — grim advertisements for the state of the capital. The same is true along the South Bank and east to Canary Wharf.
Yet of one thing I am sure. Even if financial services take a long-term plunge, no other city will steal London's pre-eminence. The reason is the same as held good in the 1980s.
It was not so much London's light-touch regulation or low taxes or diversity of “niche products” that was the magnet, all of them now diminished. The reason was the appeal of the metropolis as a place in which to live and work.
At the height of Frankfurt's bid to be financial capital of Europe in the early 1980s, I went there to test its magnetism.
Even as one German banker after another declared the city's qualities, they confessed to the impossibility of getting their London staff ever to move back to Frankfurt. They preferred to switch jobs.
A Deutsche Bank official admitted: “Frankfurt dies at 6 o'clock.” You could have the best regulatory and fiscal climate in Europe but if your city does not appeal to bright young staff, business dies.
Most of Europe's financial centres are enjoying the sight of London in agony just now. But London will recover. Its residential neighbourhoods are spacious and comfortable, its transport system (believe it or not) admirable, its theatres, restaurants, concert venues and clubs incomparable, and its people speak English.
It has an infrastructure in which both the making and spending of money are a pleasure. Proof is that it is still very expensive.
Those who have profited from such advantages in good times should have the guts to pay for them when things go wrong, especially when they are partly to blame.
But I don't care. If they want to flee, more fool them. Come the good times, they will return.
Reader views (16)
Someone like Guy Hands probably spends so much time travelling already that it wouldn't need much of change in his habits to spend less than 90 days a year in the UK. He'll still be in London as much as he wants to be, the only difference being we now get no tax from him. Well done Gordon.
- Ian, London
Nice touch, and well said, Simon Jemkins. Of course London will recover; hasn't it always?
- Tony Whitmarsh, Melbourne, Australia
Most of the people earning enough to be caught by the superior tax rate are probably too famous to enjoy the London Nightlife without a fleet of personal security, so may even prefer the anonymity they could potentially get in Geurnsey.
- Frank Of East London, Custom House
While London might be fun, something needs to be done about those high taxes.
In the mean time, i will be a sad exile.
- Matthew, Luxembourg
These delicate flowers always threaten to pack up and go if anyone suggests they might have to pay a little more tax.
I'm glad Frank Bruno decided to stay in this workers paradise but I'd be glad to see the back of Guy Hands and the other financial wizards. I don't think we can afford much more of their help and if they won't pitch in with clearing up the mess they made then sod them.
- Gerald, London UK
I love London and do not care too much about Guy Hands. Strangely his move is likely far more to do with very clever capital gains tax and inheritance tax planning than the 50% tax rate. I find it really amusing to see the ignorant level of green eyed comment which utterly misses the real point of this move!
I live in the USA now and find that the Americans despite their different ways are just so much more positive .. "things are desparate but not hopeless!"..
A lot of the long standing ex-pat Brits here feel the same way.. the glass is half full...and it cost 50% less, pay is 50% higher...go figure!
- James Ritchie, Oyster Bay Cove, NY
If a person has spent all his life working hard to build his fortune, why should he be willing to pay a higher tax so that the government can spend it another person who wasted his teenage years either drinking or watching some sports channel and is therefore either without a job or stuck in a low paying job? It is very easy to assume that everybody who is rich is a banker who can be blamed for the current economic crisis, but the reality is that a majority of the people who qualify for the 50% income tax bracket are people outside the banking community who became rich through sheer hard work. They cannot be blamed for trying to avoid paying higher taxes since, from their point of view, the higher tax rate is nothing more than a subsidy for those who chose to be comfortable living in poverty. Nobody should be penalised for making money (just because a few others made their money through actions that caused unplanned economic chaos), neither should anybody be rewarded for choosing to be lazy and poor. While 50% may have been a normal tax rate around the world several decades ago, it is one of the highest now compared to other major global economic centres. If it continues, it will simply result in London eventually no longer being an economic hub and all its citizens becoming uniformly poor.
Regards
- Shyam, London, UK
I don't remember a great deal of fuss when Hamilton became a tax exile.
- David Burns, Beckenham
Susan, it might be 1 million for a semi in chelsea however I suggest that if you take a look you can find them for around 300k in the (nice) suburbs and even less elsewhere
- Graham, London
I share the pain of the super rich.It's distressing for the darlings to get to the point where their financial advisers have to e mail them with the bad news.Flags are at half mast in support of their plight,we can only hope their new country of financial choice is ok.If not,the golden gypsies might have to flee again to a country that deserves their wealth and um,er,loyalty..
- Jonnie Of Brixton, brixton,london,england
I moved to Zug in Switzerland two years ago and can understand moderately affluent people thinking along the same lines. The quality of life is very good, wages are high, crime is negligible and as a young (ish) Dad it is an ideal place to nurse my infant to school age and to sit out the recession. But rest assured as soon as a fair wind blows through the UK economy I shall be back. I haven't sold my house in Ealing just yet!
- Coys Switz, switzerland
If you have £2m of course you can buy in a nice residential neighbourhood as long as you don't want a garage and a garden or too much space. If you have £1m then well you're looking at a small semi. Of course you can get the space but there again you will be probably be mugged or killed treking to the station.
No as someone who was born, brought up and still lives in London, this city has become a dirty, expensive, over-rated dump. I imagine 90% of the readers would flee like Hands and co given the chance. The remaining 10% are either loaded or deluded.
- Susan, Chelsea, England
"there is no local income tax top-up in Britain" - maybe not by name, but we have the council tax, which in my case is an additional 5% cut in my monthly disposable income.
- Nobby Clark, Perth, Scotland
Those johhnies won't live in any of those places - they will be domiciled there for tax purposes only but will continue to live in The Ivy and their Georgian palaces in London limited only by the number of days allowed before tax kicks in. The rest of the time, St. Juan les Pins, Gstaad, Jackson Hole, Wyoming and Dubai. If only I had become a property or retail developer instead of an old age pensioner on £90 a week.....
- John Problem, Hackney Wick, London, UK
If you are rich, apart from being burgled on a regular basis, living in London is great.
I used to be drawn home regularly because I felt, I miss London, my people and need to tank up in Britain.
Nowadays, I find the neglect and poverty everywhere quite depressing. The country is incredibly full, extremely loud, dirty and often frightening.
Blair knew he was giving Brown a crock of poo-labour but Brown was so desparate for power and had watched the gravy train long enough.
The tax billions are still coming in but after decades of severe skimming, all the Brits get to see for their money, is massive deficits everywhere.
England is faced with a failing NHS, explosion of desparate pensioners, exodus of tax payers, influx of asylum seekers, increased criminality and drug-related problems.
Our governments have clearly shown that our legal system is there to be abused and honesty is for mugs.
- Ex London, Germany
As someone who was born in London and lived there for fifty years remembering it as once being a Utopia, I would ask why would anyone want to stay there as it is now a ghastly wasteland. Everyone I know is desperate to get out and I don't blame anyone for doing so.
- R Mitchum, Exeter UK
