Non-domicile Tax Status

Kerry McCarthy Excerpts

Tuesday 31st January 2023 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

That was very interesting from the hon. Member for Newcastle-under-Lyme (Aaron Bell)—particularly his revelation that Labour aspires to be in government.

It is pretty much universally accepted that people who work in the UK, make their life here and benefit from all we have to offer should pay their taxes here. I cannot see why that is a controversial point. Non-dom tax status completely undermines that by creating a tax system that is rigged against working people. It cannot be one rule for the wealthy and another rule for everyone else. This is not about envy or wishing that we were incredibly rich, or anything like that; it is about basic fairness.

Those benefiting from non-dom tax breaks are estimated to have almost £11 billion a year in unreported income and capital gains overseas. As has been mentioned, a study by LSE and the University of Warwick estimates that this means the UK has lost more than £3 billion in tax revenue. Labour believes this money would be better spent on the NHS than on lining the already bulging pockets of the extremely rich.

This debate is about transparency, fairness and prioritising areas of society that need support. It really is as simple as that. If there were a direct choice between more non-doms and more nurses, between a tax break for the wealthy and a school child’s breakfast, what would the Government choose?

We have to ask ourselves whether we want to live in a country in which it is easier to avoid paying taxes than to see a GP. There are 4,500 fewer GPs in England than there were a decade ago, with more than 1.3 million people having to wait more than a month to see theirs. We have heard Conservative Members floating the idea that people might have to pay to see their GP. My father in Ireland had to pay to see his GP, and perhaps he would still be with us now if he had not put off going to investigate the symptoms of bowel cancer. We certainly do not want to go down that route.

The money raised by abolishing non-dom tax status could double the number of medical school places, double the number of district nurses and provide 10,000 more nursing and midwifery clinical training places. In my constituency, we have a wonderful University of the West of England campus that is training midwives and nurses. We also had a birth unit at Cossham Hospital, which had to close because there simply were not the midwives to staff it. Southmead Hospital had to be given priority, where the more critical cases go. We absolutely need to invest in more doctors and more nurses, shorter waiting times and better care.

We could also use the profits from closing this loophole to provide breakfast clubs for primary school children. We know that far too many children are spending the day at school too hungry to learn; according to Magic Breakfast, as many as 3 million children could be in that situation. Some £3 billion in lost revenue from abolishing the non-doms loophole would go a long way to filling that gap.

No one would propose this non-dom policy now if it did not already exist. As has been mentioned, this move would simply bring us into line with major economies, including France, Germany and Canada. What the proponents of the non-dom regime, and some MPs speaking here today, have failed to understand is that to the British public, who regularly poll in support of abolishing the exemption, it is about what is fair and right. A common refrain throughout the pandemic was, “We’re all in this together. We are all contributing to a common cause.” The fact is that we are not and we should be.