The Chancellor of the Exchequer is thinking of leaving the country. He hasn’t said so explicitly but that is the clear implication of his wife’s tax status. Rishi Sunak’s spouse, Akshata Murty, is classified as non-domiciled for tax purposes, which means that she is not liable to pay tax in the UK on her foreign income. The crucial point about non-dom status is that it is only awarded if the recipient can convince the authorities that they are only here temporarily and that they will, in due course, be going home. As an Indian citizen, maybe that is true for Murty but, as she is the wife of the Chancellor, we are entitled to ask whether she will be taking her husband with her. After the week he’s had, let’s hope so.
There are three aspects to this – legal, ethical and political. All of them are crystal clear. The legal question is by some distance the least important. A statement issued on Murty’s behalf – which suggested she was a non-dom purely by dint of being an Indian citizen – was foolishly inaccurate (a line now repeated by Sunak in an interview with the Sun). Non-dom status is not an automatic endowment of citizens of other countries. It is a status expressly sought by the wealthy and costs £30,000 per annum to maintain. Yet there is no suggestion that anything illegal has taken place. Murty and Sunak are absolutely within their legal rights to act as they do.
The more interesting question is whether non-dom status is really ethical. It is all but impossible to square Murty’s implicit claim that she intends to return to India with her husband’s career, which is the very definition of UK-bound. It doesn’t help that the revelation came in the same week that it emerged Mr Sunak had donated £100,000 to his old boarding school, Winchester. Quite apart from the depressing philanthropic choice – can he really not think of anything better than Winchester College? – this is hardly the act of a man who is booking the flight back home. It’s obvious that this is just a way for the super-wealthy to pay less tax. The US does not allow non-domiciled status and there is no reason the UK should either. It should be abolished forthwith. There’s a policy for the next Budget, if Sunak makes it that far.
But quite apart from the legal and ethical questions, the politics are overwhelming. It is quite astonishingly, stunningly naïve for the Chancellor of the Exchequer to think he could ever have gotten away with this. How could he not have understood that his family’s vast wealth was a problem he needed to manage? Perhaps there is some mischief in the fact his wife’s status as a non-dom came to light on the very day that the rise in National Insurance came into force. Maybe there are cunning briefers in 10 Downing Street laughing behind their hands as the Chancellor is forced to talk about how he minimises the family tax bill in the same week we learned that he had blocked an increase in the energy bill rebate from £200 to £500. The naivete is breathtaking.
Sunak was already in trouble because a crisis in the cost of living was always going to hurt the resident chancellor. He will now deal with this crisis as the out-of-touch man who does what he can to keep his fortune from his own tax collectors. It is an untenable political position, and his ratings – which went into negative territory this week after the boost of the furlough hand-outs faded – have a long way to fall yet. Sunak always struck me as vastly overrated. Never for a second has he looked like the kind of character who could command the Red Wall seats. Far too Tory boy for that. That prospect is now completely finished because the Tory coalition contains too many people who will be hoping the weather at Easter is warm because they can’t afford the heating bill.
The only possible political move is for Murty to renounce her non-dom status and do it yesterday. Probably even that would come too late, though she should do it anyway. With an annual £11.5m in annual dividends from her stake in the family firm of Infosys, why let greed cause so much damage? If it emerges that at least some of Murty’s foreign earnings are channelled through tax havens, it is hopeless for government ministers to repeat Sunak’s feeble line that his wife should be off limits because she is not a politician. It was a hopeless argument when it applied to family wealth deriving from work in Russia, and it is a hopeless argument when applied to tax status too.
Sunak is, through marriage, the wealthiest politician in living memory. It is probable that his wealth in itself is not a problem. Most people won’t know just how much money the family is sitting on, and most of those who do know won’t care. It’s not envy of the money that is the problem. The charge against Sunak is not that he is rich. It is far worse than that. It’s that he hasn’t got a clue what he looks like to the rest of us. He has allowed himself to be caught in a position that is legally watertight, ethically defensible but politically so hopeless that he has forfeited all right to be taken seriously as a candidate to be prime minister. And that isn’t, in the end, anything to be cherished. This country is led by a man who is unfit for office and plausible candidates were rare last week. They are rarer still this week.