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

My Lords, I can sympathise with non-doms; they have a choice of paying almost nothing or paying 40 per cent on their world-wide income, giving up nearly half their income to the Inland Revenue. But what if that tax rate were lower? Lower taxes are possible, without cutting public expenditure. I have good news for all non-doms; on Tuesday 13 May an independent, non-party tax plan will be launched, which would allow all non-domiciles to pay tax on their world-wide income at just 20 per cent. Under that revenue-neutral tax plan, the 20 per cent rate would be available to all, rather than reserved for a privileged minority. Instead of the 31 per cent and 41 per cent rates that normal taxpayers will suffer from next month, everyone would enjoy a total rate of just 20 per cent. The Government pride themselves on fairness. This Bill, in a small way, gives the Government an opportunity to redress a blatant inequity. Unfortunately, this House is unable to ensure that non-domiciles pay their fair share of tax, but it does send a signal. Although I am enthusiastic about the Bill, there is one point that I disagree with. I think that it should be amended to allow Peers to take permanent leave of absence at any time, not just in the three months after it is passed. Otherwise, someone who emigrates to Australia, for example, would remain subject to UK taxes as well as Australian taxes for the rest of their lives. It is well known that income tax was introduced to finance the Napoleonic Wars, but it has continued despite our victory at Waterloo and Napoleon’s death. Similarly, the non-domicile rule was introduced to encourage wealthy colonials to retire to the UK, leaving their Indian or African income tax-free. Like Napoleon, the British Empire—perhaps sadly—is no more, and it is time that the tax exemption ended too. Therefore, with just that one reservation, I strongly support my noble friend’s Bill.