Financial Times FT.com

Non-domiciled residents

Arts funding plan to reward donors

By Jean Eaglesham, Chief Political Correspondent

Published: June 24 2008 02:01 | Last updated: June 24 2008 02:01

The Tories on Tuesday will call for “unloved” non-doms and other wealthy people who give to the arts to be rewarded with honours and given potentially greater tax incentives.

Plans to give gongs to philanthropists, as part of a broader shake-up in arts funding, will be set out by Jeremy Hunt, the shadow culture secretary. He will also call for changes to the “pettifogging” restrictions on the rewards that organisations are allowed to offer benefactors to thank them for tax-free donations.

The honours system is the ideal way for the state to “reward and acknowledge” generous donations to the arts and culture, Mr Hunt will state in a speech on Tuesday. He will argue that honours are “particularly important” for non-domiciled foreigners in the UK, “who are feeling very unloved at the moment”.

“Let us not forget that many non-doms more than make up for their tax-free status by extremely generous contributions to our national life in other ways,” Mr Hunt will assert.

This spirited defence of wealthy foreigners’ ability to shield overseas income and gains from tax, now restricted by the Treasury’s imposition of a £30,000 ($58,929) charge on some non-doms, may jar with Labour. It was the Conservatives who initially suggested the idea of an annual levy on non-doms last autumn, giving the chancellor political cover for his subsequent proposals.

Labour is also likely to seize on Mr Hunt’s suggestion of greater tax incentives for lifetime gifts to the arts and culture – one of two potential but as yet unfunded tax breaks signalled by the Tories on Monday.

Mr Hunt stressed he was not making a firm pledge but said it was worth looking at extending tax incentives beyond legacies to gifts made before death.

The Tories also signalled their willingness to offer tax concessions to motorists, despite the party’s commitment to tackling the environment. David Cameron said it was “not yet the moment” to decide whether the government should go ahead with the proposed 2p a litre increase in petrol duty this autumn.

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