Non-domicile Tax Status

Michael Ellis Excerpts

Tuesday 31st January 2023 Commons Chamber

[Michael Ellis (Northampton North) (Con)]

I rise to speak about the specific issue of the constitutionality and propriety of Labour’s motion in calling for,

“a copy of the Treasury analysis related to the effect of the abolition of the non-domicile tax status on the public revenue.”

The point I wish to make could equally be made were any other papers of Treasury analysis the subject of a request for disclosure in this way. It is irregular and at the very least injurious to the public interest, and potentially unconstitutional, to open, for what would be the inspection of the financial services sector and others, papers just before a financial statement or a Budget that may very well, at least in theory, give an improper or unfair advantage to some interested parties. That is why the confidentiality of Treasury documents is so incredibly important, a fact to which the Minister alluded. For that reason alone, the motion should not be supported. It is constitutionally irregular, in my respectful submission.

The Labour party’s opposition to non-domicile tax status is another matter. I, Conservative Members and many others all think it would be wrong to remove that status, which has existed for two-and-a-quarter centuries. Further, the ability to know Treasury analysis before a financial statement would give the very people whom Labour presumably wishes to incommode some advantage. With the greatest respect, therefore, I do not think the Labour motion has been clearly thought through; were it to succeed, which is exceedingly unlikely, it would be counterproductive.

It is not just me who thinks it wrong to abolish the current arrangements. There is a very good reason why they have been in place for two-and-a-quarter centuries. I do not expect Labour Members to pay heed to what I say, but they might, I venture to suggest, pay heed to what their own party has said in the past. Labour, after all, abandoned removing this status when last in government. Alistair Darling said he did not want to turn investors away. It has been said that Labour is an anti-business party. Colleagues have referred to it as being anti-aspirational. Labour Members reject that, but I am afraid the motion calls another conclusion.

Something is better than nothing: make business go elsewhere and the whole UK economy will suffer. The Conservative Government have ensured that non-domiciled individuals pay tax on UK income, and gains and income gains that are brought into the UK, putting fairness at the heart of our system. That is what this Government have already done. They have protected almost £8 billion in tax revenue paid by non-domiciled taxpayers and have introduced over 150 measures since 2010 to tackle non-compliance, and rightly so, in our tax system. They have been closing the estimated avoidance tax gap by almost £4 billion. The rhetoric is one thing; the facts are another. There are good reasons why this motion should therefore be roundly rejected.