Non-domicile Tax Status

Abena Oppong-Asare Excerpts

Tuesday 31st January 2023 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

As we have heard from Opposition Members today, this Conservative Government have repeatedly failed to deal with the non-dom tax loophole, and what is the result? It is higher taxes on working people; tax breaks for the super-rich, when we could be training new NHS workers and delivering breakfast clubs for primary-age children; and a Government mired in sleaze and scandal, with a former Conservative Chancellor who found adhering to the ministerial code just too taxing. Just this morning, the International Monetary Fund predicted that the UK will be the only major economy to see negative growth. The choice is clear: slow growth, stale ideas and sleaze with this Government or ambition, aspiration and a clear plan with Labour.

I thank Members for their contributions to the debate. My hon. Friend the Member for Bradford West (Naz Shah) spoke passionately about how working people are picking up the tab for the Government’s failure to invest in her constituency. My hon. Friends the Members for Bristol East (Kerry McCarthy) and for St Helens South and Whiston (Ms Rimmer) got to the heart of this debate about the current system. This is about fairness—if people live here and work here, they should pay their taxes here. That was echoed by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), who said that this loophole should not exist.

My hon. Friend the Member for Leeds North West (Alex Sobel) asked a simple question, and I would be grateful if the Minister could answer it: how much tax has been lost by the loophole? Do the Government even know? My hon. Friend the Member for Lewisham, Deptford (Vicky Foxcroft) talked about how abolishing the non-dom status could help the Government to prioritise support for young people.

As my hon. Friend the Member for Ealing North (James Murray) clearly laid out, this Conservative Government are out of ideas and missing in action. Food and fuel costs are soaring, while our economy is left completely exposed. I am sure the Minister will repeat that rising prices are not unique to Britain and many countries are experiencing inflationary pressures, but what is unique to Britain is that we are at the bottom of the pack. What is unique to Britain is that the Government refuse to take action. Through decisions such as the one they will take today when they vote on Labour’s motion, the Government are entrenching the pressures that the economy faces and pushing costs on to working people as their own Ministers seek to avoid them.

No one will be reassured by the Government’s arguments that all countries are experiencing soaring inflation. The Prime Minister has repeatedly said that the UK will grow the fastest of all G7 countries, but today’s IMF stats set the UK far behind its competitors. Contrary to the assurances of the Prime Minister and Chancellor, we are the only G7 country that is forecast not to see its economy grow. The Chancellor could not be bothered to come to the House to respond to those stats today, but it is good to see the Financial Secretary to the Treasury in the Chamber.

The Conservatives have had 13 years in government, but they have failed. Throughout the chaos of the last year, with constantly changing Prime Ministers and Chancellors, the British public could be sure about only one thing—that their taxes would continue to rise while the pound in their pocket got weaker. While people’s pockets have been emptied, a few at the top are wriggling out of paying their fair share. The non-dom tax status allows the wealthy few to avoid following the normal rules and requirements met by people and businesses up and down this country who work hard and pay their taxes. Instead, those around the most powerful in Britain benefit from our country’s generosity while getting away with not contributing their fair share.

The non-dom tax status is an out-of-date, 200-year-old system that allows people to dodge millions in tax. The Government may pretend that the system is necessary to provide a trickle-down effect to the rest of the economy, but can they explain how countries with much more successful economies than ours manage without non-doms? Canada and Germany require their equivalent of non-doms to pay their taxes after just six months, and in America, they pay their tax from day one—day one! As a modern economy, Britain should operate with modern principles in line with other major economies such as France, Germany and Canada.

As we have heard, the non-dom tax loophole costs the economy £3.2 billion. With a modern taxation system, we could provide the much-needed investment that our public services are crying out for. A Labour Government would scrap the non-dom tax status and end tax breaks for private equity bosses and private schools. A Labour Government would crack down on hidden offshore trusts that allow people to avoid paying their taxes.

With the money that would raise, a Labour Government would fund the biggest recruitment drive in modern NHS history and provide breakfast clubs for all primary aged children. As my hon. Friend the Member for Ealing North laid out, Labour would train the next generation of doctors, nurses and midwives, so that the NHS can treat patients on time, as it did under the last Labour Government. Labour will support breakfast clubs for children across the country, because we all know that hungry children find it harder to learn.

A Labour Government would do all that by scrapping the non-dom tax status, as we called for ahead of the autumn statement. Although the Chancellor, or perhaps the Prime Minister, decided against it, the Chancellor told the Treasury Committee that he would look into it. Can the Minister tell us whether he has? The Government are yet to publish any analysis or provide an update on their considerations. Why are Ministers so quick to tax my constituents and so slow to act on non-doms?

That is why we are here today. We have heard about the difference that abolishing the non-dom status could make. Academics have estimated that the status costs the Government more than £3 billion, yet the Government refuse to move. Why? So far, they have refused to publish the analysis that would lay out exactly what trade-offs they are choosing to make. If the Government’s analysis shows that the non-dom status is an asset to our economy, why do they refuse to publish it? In his closing speech, will the Minister provide us with answers to some of the many questions raised today?

Labour’s proposal is not just about raising much-needed money; it is about fairness in the tax system, the same rules for all, and support for those who keep our economy growing. By voting against our motion today, the Government will make it clear exactly whose priorities they are here to serve, but Labour is clear that if people make their lives in Britain, they should pay their taxes here.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the Minister, I remind hon. Members that, if they have contributed to the debate, it is very important to get back in good time for the wind-ups.