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

My Lords, Britain is officially in recession. The spectre of deflation looms large. Retail prices have fallen over the past quarter at an annual rate of 10 per cent. Millions of our fellow citizens are struggling to keep their jobs, stay in their homes and pay their taxes, but there are Members of this House who are non-resident or non-domiciled for tax purposes. How on earth can it be right for Peers who avoid paying full British tax to vote, for example, on the Banking Bill as we pour tens of billions of ordinary, hard-working taxpayers’ money into the banks? How can any noble Lord in all conscience accept a peerage from the Queen for life and then keep signing tax returns—as you have to do as a non-dom—stating that he does not intend to stay permanently in this country? That is what non-doms do, and it is a disgrace. We face the gravest economic crisis since the hungry 1930s. Our fellow citizens deserve moral as well as political leadership from their Parliament, but we are breaking their trust if we sit in this place, vote on their laws, but keep our treasure hidden in some tropical tax haven. Britain is fighting an economic war with its back to the wall. Tax revenues and tax collection will come under terrible strain, so for Peers to wriggle out of paying tax today is like wriggling out of conscription in 1940. My Bill is even more timely and urgent now than when I introduced it with wide-ranging cross-party support in the previous Session. Then, it ran out of time, but I thank all my supporters, many of whom have taken the trouble to be here today to show the flag again. In this Session, the Bill is off to a flying start with the first Second Reading slot for a Private Member's Bill. I thank my noble friend Lord Steel of Aikwood, who was in front of me in the queue, but who is, very sensibly on a grey day like this, cruising off Africa. I look forward to hearing all noble Lords who speak today, especially my noble friend Lord Goodhart, who is exceptionally learned and helpful and a great expert on these matters and will particularly cover the question of Peers taking up temporary public appointments abroad under subsection (7). I will also be listening equally to noble Lords who were more sceptical in the previous Session, such as the noble Viscount, Lord Astor, and the noble Lord, Lord Selsdon, who always throws an entertaining and original light on any subject that engages his attention in this House. Remembering the Committee stage last year, I point out that the Bill does not change in any way any Peer’s tax status by one iota or even require him to disclose it. All that happens is that Peers will be taxed on the basis that they are fully resident and domiciled in this country for tax purposes, just like the vast majority of our fellow citizens. Clause 1 is the key clause. It states that Peers are, "““deemed to be resident, ordinarily resident and domiciled in the United Kingdom and in no other country for taxation purposes””." It is drafted like that because it is possible to be partly resident here and partly resident overseas. I have also avoided any need for Peers to make declarations publicly about their tax status or for Her Majesty’s Revenue and Customs to reveal any details about current Peers’ individual tax affairs to the authorities of the House or anyone else. We have drafted a simple and effective way of getting around that: the list of Peers’ names will be sent to the chairman of HMRC once the Bill becomes law and HMRC will be notified three months later of any Peers who have to be taken off the list under the terms of subsection (5) because they have chosen not to be taxed on that basis and have therefore taken leave of absence for life. This is a new version of leave of absence, but it is just what it says on the tin: irrevocable. That seemed simpler than disqualifying Peers who do not pay full British tax, but the result is the same, except that they keep their title. In future, the Revenue would make a one-off declaration under subsection (7) that a new Peer is resident and domiciled in the United Kingdom for tax purposes within three months of his appointment. As this represents a change in the law since noble Lords were appointed to this place, it is only fair to give those who are not content to be taxed on that basis a once-and-for-all opportunity to opt out under subsection (2). By taking immediate and irrevocable leave of absence for life, they retain their current status, whatever it may be. What we cannot have is an open-ended rolling opt-out. There is no room for peripatetic parliamentarians who are British life Peers one moment, then Liechtenstein Lords, Monaco millionaires, Cayman Island counts or even Belize barons. Of course, Peers may want to spend time abroad for health or family reasons, but once you have accepted a Peerage from the Queen for life and a seat in Parliament for life, you should pay full British taxes on your income for life. Some Peers have argued that that simple change to clean up our act and our image in the country should wait for the second stage of Lords reform. As the House of Commons Public Administration Select Committee pointed out this week in its excellent response to the White Paper on an elected second Chamber, that moment, "““is some years off even at best””." The committee, in arguing for a stronger House of Lords Appointments Commission, a view that I very much share, states that, "““change is needed and possible in advance of any legislation on the future shape of the second chamber””." The logic is just the same for cleaning out the dark corner of Peers’ taxation status. It makes no difference whether you support an appointed or an elected chamber. Anyone who sits in this place and votes on our laws must pay full British tax.