Non-domicile Tax Status

Justin Madders Excerpts

Tuesday 31st January 2023 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

This place is a contradiction. Look at the speed at which this place operates when the Government are determined to bring about a change in the law—from the minds of Ministers to the statute book in just a few weeks. Then I look around, and I see the archaic practices that this place still reveres. Yes, it can be argued that traditions have their place, but when we look under the surface and see some of these ancient laws that not only remain in place, but that some seek to defend, it becomes clear that the forces of conservatism are alive and well here.

Non-dom is a legislative hangover from the 18th century. Far from being an ancient and noble right, it is nothing more than a tax avoidance device. A week is a long time for some; it appears that 220 years is not long enough when it comes to helping your wealthy friends or even your spouse escape from paying their fair share of tax. In many ways, the intransigence we see in the face of mounting opposition to this outdated law shows the Government’s poor approach to the UK tax system. They have failed and continue to fail to act upon and prevent basic abuses of the tax system.

I have no doubt that some on the Government Benches believe that people who avail themselves of such loopholes as non-dom are being clever or aspirational, as we have heard several times today. I suppose they might say, “Why pay more tax if you can use these loopholes to your advantage?” That misses the point. Taxes ought not to be viewed as something to avoid; they should be viewed as part of everyone’s contract with society—a contract that says, “Pay your dues, and in return we will provide security, education, healthcare and transport.” In short, it is the bargain necessary in every civilised society, and it is crucial to securing a fair country that works for all, providing the services on which we rely and security and prosperity for all.

There should not be a two-tiered approach to taxation, where the super-wealthy can shield their riches with expensive accountants and the rest of us have to pay more as a result. Put simply, such loopholes should not exist, because they benefit a tiny proportion of some of the world’s wealthiest individuals at the expense of everyone else in this country, and frankly they are laughing at us. Look at how the bulk of these people live in the wealthiest parts of London, making a mockery of the levelling-up agenda.

It is also worth saying that some of the people who choose to live in this country then decide not to live by the same rules as everyone else, because they believe they will be wealthy if they do not pay their full taxes in the UK. Perhaps the most striking thing about this group is not just that they are incredibly wealthy, but how numerous they are as a proportion of the country’s highest earners. Research published last year from the University of Warwick and the London School of Economics found that 30% of those earning in excess of £5 million were registered as non-doms in 2018, and a further 10% have been non-doms at some point in the past. That means that just under half of those earning more than £5 million a year have chosen not to pay their fair share of tax to the UK coffers. What kind of country are we living in when those with the broadest shoulders get to opt out of paying their fair share? That shows that non-dom is a loophole for the rich.

We still have people defending this archaic status in the House. They argue that removing it would damage the economy, as those registered would leave, taking their riches and spending power elsewhere. I even remember the Chancellor arguing just a few months ago that if we scrapped non-dom status, those people would leave the country and spend less money in restaurants. As an economic strategy goes, it is little wonder we are the only country in the G7 with negative growth, when our great hope for prosperity is a few rich people spending more money in restaurants. We believe that everyone should pay their fair share in tax and that people stashing away money in offshore accounts is not acceptable, and we do not think that the wealthiest in society should be able to get away with this any longer.