Apologies for another thread here on the issue that seems to have been dominating my every waking moment (from 6am until coming off air at 10.15pm yesterday) right now:
After a couple of days of media storm around the tax affairs of Rishi Sunak and his wife, Akshata Murty, on which I have offered an opinion or two, there are still questions to ask, including can Sunak survive? Another thread….
We still do not know the answers to all the questions that arise as a result of this affair, and the emergence Sunak having had a green card in the USA until 2021 and his wife ‘voluntarily' paying tax certainly complicates things.
Regarding the green card, there are a number of issues. Tax is not one of them. He likely paid more tax as a result. But question as to loyalties do matter and it's clear a Sunak kept his US residence option open for a year after being Chancellor.
It's fair to ask in that case to which country his loyalty is due in that case? I'd even ask who he thinks he is acting for? That's a question that needs answering now. Why is he a politician here if he wanted to live in the US? What's that really about?
There are also questions of integrity. Holding a Green Card looks pretty incompatible with the oath MPs have to take. And there are also, apparently, questions on whether Sunak broke US law by being a UK politician whilst holding a green card, which seems to be illegal in the US.
All these things matter. We need to trust this man's judgement, honesty and integrity. Can we when he can appear to willingly hold what look to be legally and ethically incompatible positions? That's a hard ask for any politician to make.
Then there is his wife's offer to pay tax. My interpretation of Ashtaka Murty's statement is she's really changed nothing and remains non-dom but will now say she's remitted all her worldwide income to the UK on her tax returns and so will pay tax on it here.
However, that ensures that her capital gains can stay out of tax and her estate might well avoid inheritance tax. In addition, we've no way of knowing if her income is now in offshore trusts that would then also avoid the UK tax charge.
Worse is the arrogance of this statement. Murty's one of 0.2% of people in the UK who pay for the right to choose how much tax she pays here. The rest of us do not have that choice. That's still very definitely one rule for the Chancellor's wife and another for the rest of us.
All this being noted, and I suspect there is more to come, the politics of this are becoming clearer.
What is the coming very apparent are four things. The first is that both Sunak and his wife have made statements which have been misleading, at best. The most obvious of these was with regard to a claimed relationship between non-domicile and citizenship, when there is none.
The other was a claim between the need to avoid paying tax on worldwide income in the UK and the right to return to India. Again, there was simply no such link.
On both these issues the statements that have been made by Rishi Sunak or spokespeople on his wife's behalf have not been fair representation of the true situation in the UK, on which point just about every tax commentator in the UK has been agreed.
This might not matter if Sunak was not Chancellor of the Exchequer, but I think we have a reasonable right to expect the Chancellor to get statements about tax right, and to be able to hire suitable advisors if the Treasury can't help.
If Sunak cannot get issues such as this right, we have a reasonable right to ask whether he can get bigger questions right as well. Politically his failure to attend to detail on this issue, and as a result to issue what appear to be misleading comments, is serious.
Second, it is very clear that Sunak subscribes to the idea of tax mitigation within the limitations of the law is acceptable without apparent consideration of the ethical or political consequences.
In a country where we are dependent upon voluntary compliance with that law, and on most people filing tax returns in good faith and within the spirit of the law, meaning that most do not need their tax affairs investigated as a consequence, this is a dangerous precedent to set.
Third, Sunak's statements, his green card and his defence of his wife's tax mitigation and of her claims to not be committed to the UK, all cast doubt upon his own commitment to this country in which he does at present hold the second-highest office of state.
Quite reasonably people expect our politicians to adhere to a number of standards. One is to accept the sacrifice that office demands. A second is to put the interest of the country first. Right now it seems that Sunak fails both tests.
Last, the questions that have arisen with regard to Sunak having a green card and for how long he held it opens further issues, not least statements he might have made to tax authorities in one country when a legislator in another.
I am making no suggestion with regard to illegality or dishonesty here, although I am suggesting poor communication needing resolution. What I am questioning is Sunak's commitment to the UK, his financial ethics, his political ethics and so his suitability to hold high office.
What seems apparent is that at a time of high political stress in the UK Sunak is revealing that he does not have the character, the commitment or the willing to lead the financial management of the government of this country. On all fronts he's now a loser for the Tories.
So, two questions. First, will he quit? I have a feeling he will. He's hating being briefed against. He's unable to understand why it's happening: the world was meant to love him, he thought. And his wife and her family will hate this too. The chance he'll just walk seems high.
The alternative? Johnson will ditch him by offering him a much more junior post when he next reshuffles, and then he will walk out of both Cabinet and government.
My thinking is Sunak knows his currency with the only community that matters to him – the wealthy - will be higher if he walks of his own accord. I really can't rule out that he might.
When seen through the lens of political economy - of which I was a professor for five years - which is all about power relationships, what we can see here is that Sunak's power is ebbing away very fast. When will it run out? Who knows? But it looks like it is heading that way.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
“The most obvious of these was with regard to a claimed relationship between non-domicile and citizenship, when there is none.”
That is not correct. As the Home Office’s “Nationality Policy: Domicile” policy document (July 2017) which HMRC uses states:
“The fact that a person has acquired a new nationality CAN BE A RELEVANT FACTOR in showing a change of domicile, but is not
conclusive…”
So not conclusive but to say there is NO relationship is wrong. It is a factor to be taken into account.
“but will now say she’s remitted all her worldwide income to the UK on her tax returns and so will pay tax on it here.”
No, not at all. She will be taxed on her world-wide income regardless of whether she remits it or not.
“However, that ensures that her capital gains can stay out of tax and her estate might well avoid inheritance tax.”
Right on IHT (although she’s only 42 for goodness sake) but wrong on CGT. She will be taxed on worldwide income AND capital gains.
You don’t seem to understand these issues.
She is not ceasing to be non dom
Please make relevant comments based on what is happening rather than troll
Of course nationality is a relevant factor to domicile, and more to the point change of nationality may be an indication of a change of domicile, as it suggests a change of allegiance and long term ties from one country to another. But it is not as determinative as was being presented. This is what was being said a couple of days ago:
“Akshata Murty is a citizen of India, the country of her birth and parents’ home. India does not allow its citizens to hold the citizenship of another country simultaneously. So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes.”
Just being a citizen of India does not mean a person is domiciled outside the UK, and even more does not mean they are required to claim the remittance basis.
And then the recent statement say:
“I will no longer be claiming the remittance basis for tax. This means I will now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises.”
She won’t be changing her domicile though. And there are ways of arranging an individual’s affairs so income and gains do not arise to them directly.
Precisely
To be honest this is hardly something that justifies a whole day of your time, though it can’t be a bad thing that the media have discovered that you are a tax expert interested in fair taxation for the public good – in contrast to most tax experts whose interest is tax minimisation for the individual good.
But one thought. Boris Johnson was reported this morning as saying he didn’t know about Sunak’s US status or his wife’s tax arrangements. That seems to imply that either Sunak did not disclose potential conflicts of interest (the financial matters of his household are as relevant as himself for that) or that whoever was responsible for considering them couldn’t see the issues which are plain to the rest of the world. Neither possibility reflects well on the Conservative government.
Agreed
And was this a good use of time?
I would say yes, because I used it to make clear this rule needs to go, we need tax justice and we need ethical ministers
It really does sound as if Boris is distancing himself from Sunak. Difficult not to think a declaration of full confidence from him is in Sunak’s near future, effectively bringing down the curtain on the chancellor’s political career.
While I agree that Sunak has misrepresented the issues I have some sympathy for him. I think he’s probably the most honest bloke in the cabinet. He’s teetotal and has risen from his intelligence.
I think the bigger issue is reform of non-dom status and I wish the Labour Party (or the tories… I can dream…) would talk about action.
If this scandal is concluded by Mrs Sunak making ‘discretionary’ payments to HMRC, the opportunity for this to lead to wider tax reform is lost.
Labour has had this in its manifesto since 2015
I’m not sure we can infer much intelligence. Certainly his political intelligence is pretty dire. I’m terrible at politics, but even I can see the stupidity of what he did (and without a doubt would have before it became public). He holds on to standard Tory economic dogma despite both the Zeitgeist and the evidence suggesting he should do something different. The only really point I can’t argue with (and which I don’t know anything about) is that he’s teetotal. I’m not sure what that has to say about his intelligence.
I really doubt that anyone who went to an elite public school can be said to have “risen from his intelligence”. The networks and connections obtained from such a privileged start in life have given rise to any number of dunderheads making a fortune in the city or a career in politics.
Indeed, and any culture which promotes the connected over the able, generation after generation, will obviously collapse. Here we are.
My view about MPs and their spouses is that if you cannot cope with the heat of the kitchen then stay out of it. Elect NOT to go into politics perhaps?
It is obvious as to why we need to know what is going on in MPs lives because just think of what it would be like if we did NOT know about Sunak’s wife?
It would be harder to discern why he is such a heartless bastard in the first place. Now it is much easier to see why and adds to the narrative of pure ignorance that is growing as a result.
How are we to gauge standards in public life if we cannot ask questions like this? And if you are dealing with Governments like this one with no standards at all?
Throughout the reign of this Government, time and time again we see its leading politicians compromised by their behaviour and background circumstances, whether its going to parties that they should not have gone to or revealing how they have lined the pockets of their chums and financiers.
If you don’t like it Rishi, then please bugger off somewhere else.
And before the trolls jump in ‘somewhere else’ means ‘out of politics ’
Yes, exactly, out of politics it is.
Precisely this.
I cannot understand the sympathy in many quarters for Mr Sunak. He can very easily leave politics and I guarantee he’ll be perfectly fine.
The only reason he got into politics in the first place, as far as I can see, is vanity. And that’s me being kind. If you’re that rich, why not try to do some good in the world, help people, rather than punish then further amidst terrible times?
This is a test of his character, which he failing.
Dear CNH and PSR,
Rather than assuming the worst in someone you should try and assume the best.
I suspect Sunak went into politics for a mixture of idealism and status. This man hasn’t come from money, he has been gifted with brains and been to the top schools in the world as a scholar. He’s rich because he married well. He and his family must have been under horrible stress this week when ultimately they have done nothing unlawful.
I want people in politics who are intelligent, hardworking and integrid. You rarely find all three but as Voltaire said, the enemy of ‘good’ is ‘perfect’. I dont agree with all his decisions but Sunak reads his briefs, unlike say Boris. That he is independently wealthy is his good fortune and to some degree reduces the incentives for corruption.
It’s very easy to say he can just leave (especially without proposing an alternative) but why do we want a capable individual to leave high office?
Let me presume you are writing in good faith, in which case I just have to say you are completely misguided
Sunak appears to know nothing of macroeconomics
Has has had an empathy bypass, which is politically incompetent
He helped trash the economy when in hedge funds
And his tax ethics are non existent
He is now consigning millions to poverty
Your definition of competence is very strange indeed
I suggest you think again
I can’t seem to reply to TomC directly, but in reply —
We clearly see different things.
I have not “assumed” the worst in Mr Sunak, I am seeing it for myself.
He may well have been a “capable individual” while at “the top schools in the world”, but he appears to be, at best, duff, and at worst, negligent bordering on abusive in his current post.
You’re asking me to be sympathetic towards a man who appears to have little or no sympathy for the majority of those who he holds great power over (power, don’t forget, he himself chose to pursue). Given the increased poverty and human suffering I have seen every day in my work over the past 10 years, not to mention that in the street, on my doorstep, clearly visible to all but the most callous or wilfully ignorant, you’ll have to excuse that my
sympathy does not stretch that far.
I’m sorry but I’m going to come out and say it.
Sunak and Co’s motivation has nothing in my view to do with vanity or even being naïve about giving something back.
This is all about neo-liberal free market fundamentalists making their own world.
And you make your own world by getting into power and making it there , entrenching it and keeping it.
It is nothing but the perversion of sovereign power, democracy and the law and turning a blind eye as to where people like Sunak come from. We tell ourselves that those in charge need to be in touch with the ‘real world’.
My arse!
‘Real world’!? Someone who poses with a £180 Blue tooth coffee mug is not living in the effing ‘real world’.
This is allowing the poachers to infiltrate the game keeper’s house and then complaining that all the trout and pheasants have some how disappeared.
But still we tolerate it over and over and over again.
It’s about time some of you woke up – and right quick.
So, you go into politics.
You end up not only as an MP but in one of the highest and most ancient offices of state whose tentacles reach into every branch of government and you dont think that your wifes tax arrangements on her massive wealth might be an issue
Strange
We had a retirement do for a colleague yesterday at work and we got to talking about our pensions and what not.
We compared notes, and we all agreed that since 2010 and the advent of this Tory government, our wages had seen a reduction of 25% in our part of the public sector at least (essentially a social housing department in a large town in the East Midlands).
For this, there is absolutely no good reason at all – never mind the lies told about deficits which are just ledger lines recording Government spending/investment and the lack of denial by Labour – there is simply no excuse for any of this at all.
What broke the economy in 2008 was greedy banking and poor over sight and regulation – not overspending by any Government I can think of.
Yet the opportunity was taken to just take it out on those sectors of the economy NOT responsible for the meltdown like the public sector.
Sunak therefore is a just another in a long line of predatory capitalists who have got themselves into Government to manufacture the lie that it is the States obligations to its people that cause economic chaos and not the unprincipled capitalism that made him and his wife rich in the first place.
Not only should he get out of politics, but he and the missus should also use their green cards and go and live in the United States where their indifference to the lives of real people might be less controversial and they’ll be more likely to be with a larger group of like-minded people.
My observation of Ashtaka Murty’s affairs is that she has employed advisors to avoid tax, the advice given was to become non domicile and pay just £30,000. Now she has declared that she will pay UK taxes she will use advisors to use tax avoidance legally, the likely hood is she will pay very little tax, but slightly more than £30,000. Will she pay millions in tax or pay hundreds of thousands for tax advice and avoid a big tax bill?
We don’t know and never will
Which is why it’s the principles that matter
It seems fairly clear to me Johnson has skewered Sunak, who naively walked into his trap. Sunak was never a real contender for PM anyway. He has no charisma. His future has been decided. He’s an also ran. What concerns me is that this leaves Johnson in an unassailable position. There are no other contenders. He can ride out the parties scandal on the back of the Ukrainian invasion. I suspect the May by-elections will also give Johnson a boost. I am not expecting the drubbing predicted. A combination of opposition ineptness and rising levels of anxiety will convince people to stick with their party or not vote at all. I see Sunak’s demise very negatively. There is nothing to stop Johnson going the whole way now. He will be the next Orban, and the UK the next Hungary.
I am very grateful that the discussion of Mr and Mrs Sunak‘s tax affairs is allowing the whole nation to Think more clearly about power and responsibility and so heed Richards tax teaching. The Sunaks are living out the Hayek model of protecting personal freedom by abdicating the operation of the state and outsourcing it to the market. By taking on the responsibility of being Chancellor of the Exchequer, Mr Sunak has caused everyone to perceive that Thatcherism inevitably leads to unsustainable conflicts of interest. The whole country can see that holding a US green card in his case was wrong. They could also see that an orthodox marriage, which the Sunak‘s appear to enjoy, means that the wife’s status and behaviour affects the husband. You don’t have to hate the rich to come to this conclusion. The point is not that the rich are immoral, but that it is more difficult for them to be moral.
Johnson is plainly immoral, having a relationship with the truth similar to Trumps. Does Sunak, or does he simply regard practising Mammon as the natural and inevitable order of things? In other words, is he cynical or wrong minded?
Either way, I am personally grateful that the question has been raised, because the overwhelming part of the British public are in no doubt that you cannot serve two masters. The chance of thinking about this, and the welcome arrival of the right answer, can only be beneficial. And it’s illuminates Richards central thesis. Right question. Right answer. Available solution. Happy day.
Thanks
I noticed a real misunderstanding of the the nature of the Sunak problem that goes to the root of the problem. In BBC Radio Scotland GMS this morning, Henry Hill of Conservative Home criticised Sunak for his political naivety, but not for any deeper or enduring failure. Hill’s misunderstanding arises from the malignant form of Conservatism that has transformed modern Neoliberal Conservatism; the party of Johnson and Sunak. Hill argued that Sunak’s failure was only in the political optics, not the management of his family taxation; because for centuries Chancellors had made fiscal decisions setting rules that would affect themsleves, and their families. This is a fundamental error. Chancellors In the eighteenth century (and even largely, the nineteenth century) of course set the rules for everyone. The difference from modern Neoliberal Conservatism was that in the eighteenth century, from the perspective of the individual or family, it was principally land that was taxed. Indeed one of the prime justification’s for the political power and entitlement of the landed (and the aristocracy) to rule, was that it was land that paid the taxes. Power ans status came with obligations; and because land was taxed, land (unlike trade or goods) could not escape taxation. The change came early in the twentieth century, when ‘land’ managed to pass the bulk of the tax burden from land, to corporate and individuals, who – as the landed well knew – are of course not so easily caught by tax rules, depending principally on the wealth and shiftability of the resources they commanded. All this was perfectly predictable, but nobody saw that Neoliberalsim would develop this pricniple into a complex political policy, servicing a new Global elite; who would establish one set of rules for the taxpayers, and another set of rules for the tax-setters: Neoliberal Conservatism simply provided a new form of quasi-aristocratic entitlement – unencumbered power without responsibility.
They dropped me from that programme – without telling me until afterwards…I was waiting for the call still, arranged yesterday
Richard,
The public is very angry about this Sunak issue, but are deeply confused. The history is absolutely critical to understanding. The Americans built their argument for independence on the idea of ‘no taxation without representation’. Neoliberalsim has turned this on its head; leadership of the representation (the Party of government) is open principally to those who can avoid taxation.
It was the transfer of tax from land (fixed and unavoidable in a pre-digital age), to ‘income’ or ‘profits’ that began a radical and fundamental change that actually has failed to universalise representation to go with universal taxation; to a system of taxation “shiftability” and corporate transferability has brought a new Global elite to power in our politcs, but without full, taxable responsibility The confusion of the public is deep. They know something is wrong, but they are so hamstrung by the political ideology of neoliberalism, which has distorted their understanding. They keep trying to see this in the neoliberal frame of “optics” rather than “responsibility”‘; power can only exercised by those bound exclusively by the responsibilities that are its only viable justification.
I cannot emphasise this enough.
I am hearing you
Parliament itself came to be sovereign by building on its capacity to tax. It did not possess, or even claim “sovereignty”. It broke the absolute power of monarchy through taxation. It is at the heart of power. The problem is that the intelleectual emphasis has been on issues of “rights”, rather than the real motors of power; money, tax and economics.
True