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The Chancellor, His Wife and Non-Dom Revelations

For Akshata Murty, a UK resident whose holdings include a stake in Indian multinational Infosys, believed to be worth in excess of £500m help yourself of the UK’s non-domiciled status is neither surprising nor unfavorable. The regime allows individuals to earn overseas without paying UK taxes for up to 15 years. Each person should be able to make any accommodation they see fit within the law. But the fact that Murty’s husband, Rishi Sunak, is Chancellor of the Exchequer, who has ultimate responsibility for raising and collecting Britain’s taxes, means Murty’s tax affairs are rightly the subject of political debate.

In recent decades, states have competed to offer easy living and low taxes to the global levity. A hypermobile elite was able, with the willing consent of the political classes, to organize their financial affairs in such a way as to minimize their tax debts. Changing political mores is not only at work in the UK, but the issue is particularly hot for British Conservatives. A party that once championed the free and easy movement of global wealth is now producing ministers who look like rabbits in headlights when asked to defend the idea that the tax system might be trying to attract the wealthy.

The story also exposes Britain’s eccentricities Non-domicile Regime. Wherever Murty’s spiritual home may be, she is now clearly ‘domiciled’ at Downing Street and her country of residence is the UK. It is also unclear whether the non-domicile relief is good business for the state treasury or for so-called non-doms.

However, Labor leader Keir Starmer is clearly wrong when he says Murty’s tax status reveals “stunning hypocrisy” on the part of the Chancellor. The legal rights that Murty enjoys are available to anyone who qualifies, and her right to use any means permitted by law to manage her financial affairs is no different than that of any other citizen.

Nor the defense raised through the Sunaks prolong credulity. It is wrong to suggest that Murthy can only keep her Indian citizenship if she actively seeks non-domicile status in the UK. It’s not enough to say that the Chancellor’s wife’s tax affairs are only of lecherous interest, as some Conservative ministers have tried to suggest. Just as companies have a legitimate right to require employees to disclose conflicts of interest, British voters have legitimate concerns about their chief financial officer’s tax affairs. And it’s disingenuous for Sunak to say that Murty’s financial arrangements are a product of her feelings about which country she truly calls home. That both Sunak and Murty held green cards pledging the holder to make the U.S. his permanent residence further undermines Sunak’s case, particularly as his status as a U.S. citizen extended into his time as Chancellor.

Sunak’s misguided defense of his wife does no one any good. It does not encourage a healthy debate on how the structure, shape and scope of Britain’s tax policy could be improved, or a sane debate on whether the UK is too warm a home for the ultra-rich, be they Russian oligarchs or otherwise. The goal of suppressing the chorus of criticism of the chancellor or his wife has also clearly failed.

Revelations about Sunak and his wife’s personal affairs smack of politically motivated leaks. But that doesn’t relieve the chancellor from having to explain why Britain’s non-domiciled regime works for the country and why it’s legitimate for the world’s wealthy, including his wife, to use the system. If he feels the regime cannot be defended, he should reform it.

https://www.ft.com/content/54d6148d-ebbf-4042-82b1-4b2d17231d69 The Chancellor, His Wife and Non-Dom Revelations

Adam Bradshaw

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