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House of Lords (Members’ Taxation Status) Bill [HL]

My Lords, I warmly welcome the Bill of my noble friend Lord Oakeshott to disqualify from voting those Members of the House who take advantage of the special rules for non-domiciled individuals, which allow them to avoid paying tax on the majority of their income. The non-domiciled people who are Members of this House are just the tip of the iceberg because there are about 115,000 individuals claiming non-domicile status in the UK, many of whom pay little or no UK tax. I would like to argue in favour of reforming the whole tax system for non-domiciles, but unfortunately this House does not have the power to amend tax law. However, this Bill is a start, because I firmly believe that those who choose not to be subject to our taxes do not deserve a part in making our tax laws. The British tax system is supposed to be based on fairness, and I hope that it will be. It is clearly unfair that a taxpayer can enjoy all the benefits of UK living, and yet at the same time substantially reduce his tax liability by claiming that the UK is not his domicile. While most of us in this House pay up to 40 per cent income tax, a few pay substantially less, merely by the accident of birth. The non-domicile rule is only part of the manifest unfairness of our society’s tax system. At one extreme, we have very rich people living here yet paying virtually no tax, and very wealthy hedge fund managers earning millions yet paying just 18 per cent tax. But there are also millions of people earning just the minimum wage, yet paying 31 per cent tax on more than half of their income. There is nothing wrong with an 18 per cent tax rate, but not when the poorest are charged 31 per cent on the minimum wage. Even the Government’s regressive proposal for a fixed tax of £30,000 a year barely touches the wealthy non-domiciles. There should be a public register of all those people who elect to be treated as non-domiciled. They are very privileged members of our society, in many cases with British nationality, living here permanently and yet able to avoid the 40 per cent tax rates paid by most of us here today. Several of those people have been awarded peerages, and others have received knighthoods, so they are very privileged people indeed. Here, I declare an interest. My father was born abroad, as were my wife and her parents, so my accountants advise me that we could claim to be taxed as non-domiciles. I am privileged to have a significant income, on which I pay a six-figure tax bill each year. I do not object to paying these taxes; although I could wish that they were much smaller. Nevertheless, if my wife and I were to be treated as non-domiciled, our tax bill would be reduced by 92 per cent. I have declined to claim these tax advantages, because I believe that I should not live in the UK, with all the advantages that that brings, without paying my share of the tax burden.