Tax dodging, privilege and power

10th April 2022

Sunak and Murty – too many more also evade taxes

The Rishi Sunak story, which has been dominating the news this week, is not really about Rishi Sunak.  It is not even about his multi-millionaire heiress wife, Akshata Murty, though both are clearly implicated as individuals.  The headlines have centred around the fact that Murty, by virtue of holding an Indian passport, has claimed non-dom status in the UK for tax purposes, effectively avoiding taxes of an estimated £4.5 million per year, on dividend payments from shares she owns in her father’s IT company.

All of this while she has snuggled beneath the sheets at 11, Downing Street next to her Chancellor husband, the perpetrator of a massive tax hike for the majority of the population, whatever type of passport they hold.  Following the furore which has followed the revelation that the Chancellor’s wife is essentially a tax dodger, Murty has said she realised many people felt her tax arrangements were not “compatible with my husband’s job as chancellor”, adding that she appreciated the “British sense of fairness”.

How very magnanimous!  However, while Murty has promised to pay UK tax on all income from last year and subsequently, she will retain her non-dom status, which could in future allow her family to legally avoid a significant inheritance tax bill.  UK taxpayers are required to pay 40% on inheritance (above £325,000), while non-doms are exempt from the tax. Murty has assets of at least £690m held in shares in her father’s IT company, tax charged on this at a rate of 40% would be £276m.

Exposing hypocrisy at the heart of government is never a bad thing and Sunak has been twisting and turning over this issue, with his political aspirations clearly turning to dust before his eyes.  As the main political beneficiary of this uproar, Boris Johnson has been suspiciously quick to say that he knew nothing, denying that anyone in his office was briefing against the Sunaks, and praising the chancellor for doing an “outstanding job”.

Sunak’s “outstanding job” in delivering Tory policy, it should be remembered, includes a 54% price rise in the energy cap with average household energy prices hitting an estimated £2,300 by October.  In order to deal with this, according to the Resolution Foundation, the typical working age household will experience a 4% reduction in income this year, an estimated £1,100.  With inflation running at 8% and the cost of living crisis hitting the poorest hardest, an unemployed person will see a 15% drop in income, a further 1.3 million, including 500,000 children will drop below the poverty line.

The political judgement of Sunak, in attempting to defend the indefensible, has led many to write his political obituary, including many in the Tory press and those on Tory benches in the House of Commons.  

The reality for the working class at the sharp end of Tory policy however is that replacing Sunak will make little difference, as there are any number of “Sunaks” waiting in line to take his place.  The character and judgement of individuals has its role in politics but the real issue is not the political judgement of Rishi Sunak, or even the tax arrangements of his wife.  The real issue is the system which allows millionaires to exist while others are unemployed, starving or homeless.  At some point Sunak will be replaced but the system which allows the rich to launder their wealth, protecting the privilege and sense of entitlement of the ruling class remains firmly in place.

The response from the Labour Party has been led by Louise Haigh, shadow transport secretary who, when interviewed on BBC Radio 4 stated,

“The chancellor has not been transparent. He has come out on a number of occasions to try and muddy the waters around this and to obfuscate.  It is clear that was legal. I think the question many people will be asking is whether it was ethical and whether it was right that the chancellor of the exchequer, whilst piling on 15 separate tax rises to the British public, was benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds less.”

Haigh makes a fair point but it does not go far enough.  Labour consistently fail to raise questions about the whole system of capitalism and the extent to which the privileged few continue to protect their position at the expense of the many.  This is the role and raison d’etre of capitalism as a political system.  The role of the Tory Party within that system is to defend wealth and privilege, however much they may try and divert attention with warm words about levelling up.

Labour’s attacks upon Rishi Sunak will only be of value if they go beyond the criticism of even Tory supporters who cannot defend Sunak’s position.  Labour need to be mounting a challenge which questions the system which gives rise to millionaires and tax dodgers while at the same time tolerating mass poverty.

‘For the many, not the few’, as a political slogan and an actual aspiration has not outworn its relevance by a long way.    

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