There is a new demand for transparency from those who represent us in Parliament. MPs expenses, their tax treatment, and their outside sources of income are all coming under closer scrutiny. Better regulation and disclosure has been suggested and yet that there seems one obvious and simple solution to this problem.
Once the new allowances for MPs’ and peers’ expenses have been agreed they should, like the expenses of all other employees in this country, be reported to HM Revenue & Customs and be included as income on the MP’s tax return. The MP in question would then have the duty to submit a claim to prove that the expenses were allowable in the course of their employment. Anyone that were not would be taxable, and parliament should be held to account for why they were paid. The MP would, of course, pay the tax.
There would be an exceptionally easy way to check that this was taking place: in exchange for the additional allowances that MPs and members of the House of Lords might enjoy because of the peculiar nature of their employment they would be required to place their tax returns on public record each year. This is, of course, required of politicians in the USA despite it being the bastion of privacy.
Anyone standing to be an MP would have to do the same: their tax return would have to be filed for public inspection at the time that they registered as a candidate in an election. Persons proposed for nomination to the House of Lords would be subject to the same scrutiny. Their tax returns would be placed on public record when their nomination was approved.
A one clauses act of Parliament could achieve this fundamental change in transparency and disclosure that will, at the same time, make public all the other sources of income of MPs, present and prospective, and of members of the House of Lords.
Adding a second clause could resolve another long running problem. There has been ongoing uncertainty about the tax residence and domicile of some MPs and peers. This would be resolved if all of their tax returns were available for inspection. Any person not resident and domiciled in the UK would then be disqualified from holding membership of either House of Parliament.
If parliament is serious about showing that its members comply with tax law the solution is readily available: make it possible for all to see that this is really the case.