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Last Updated: Tuesday, 11 September 2007, 11:29 GMT 12:29 UK
Warning over super-rich tax rates
Richard Lambert
Mr Lambert warned unions against a 'protectionist' stance
Raising taxes to "slash" the income of the super-rich would be "disastrous" for the UK's economy, the director general of the CBI has warned unions.

Richard Lambert told the TUC "talent would drain out of our economy".

Unions are unhappy about the low levels of tax paid by some business people, especially private equity firm bosses.

Mr Lambert said he believed business was "more than paying its whack", but agreed there were questions about the tax rules for those who live abroad.

In the absence of collective nation states being able or willing to challenge this authority, the collective trade union movement remains the only credible alternative
Unite's globalisation motion

The main thrust of Mr Lambert's speech, on the second full day of the annual gathering of unions in Brighton, was in support of globalisation.

Unite, the UK's biggest union, is calling for the TUC to take part in a "global response" to the influence of large international companies.

Its motion to the conference says: "As the global marketplace takes ever greater control with less accountability, trade unions need to work more closely with international trade union partners."

It adds: "In the absence of collective nation states being able or willing to challenge this authority, the collective trade union movement remains the only credible alternative."

'Cut the UK off'

Mr Lambert said employers and unions had "vital common interests in fostering an open and constructive discussion about the benefits and costs of globalisation".

He added that "to push back against the forces of globalisation, by being protectionist and restricting cross border flows of goods and services, and by slashing the income of high earners through the tax system... would be disastrous and have serious consequences for growth and employment.

"It would cut the UK off from the benefits of open markets and free trade, and both capital and talent would drain out of our economy into someone else's."

In a question and answer session afterwards it was put to him that wealthy, "non-domiciled" UK citizens manage to exploit tax laws as a result of listing themselves as living abroad.

He was also asked about the issue of private equity firms, some of whose bosses have been said to pay lower rates of tax than cleaners.

Must be 'fair and open'

Mr Lambert said: "There's a legitimate question on the non-dom side."

He added: "We need to know more about the non-doms - how many there are and what benefits they bring to our economy."

On private equity firms he said that because their role in the economy had grown in recent years, more information should be disclosed by them.

He said that, in general, it was important that all the UK's tax rules to be seen to be "fair and open".

The TUC wants tax loopholes for UK citizens living abroad part-time should be closed, but it is not recommending a change in the higher rate of income tax.

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