Is Rishi just too rich for politics?

The obvious and perhaps only way out of this mess for Rishi Sunak was for his wife to pay double taxation: that is to say, to be taxed in India for any income on her 0.9 per cent stake in Infosys, the $100 billion company set up by her dad, and then taxed in the UK too. She doesn’t make this point in her statement. To talk about double taxation would sound like complaining – and already the idea of the Sunaks being irritated by questions about their tax affairs is being used against them.

The Chancellor might be privately annoyed, arguing this double tax has never been required of anyone before. Is this to be the new test for the spouse of anyone in public life? But, as I say in my Daily Telegraph column, there has never been a Westminster Wag like Akshata Murthy. A Chancellor whose family wealth exceeds that of the Queen is a scenario that was always going to raise issues. So might her decision to pay full UK tax put an end to this? Or is the real problem that Rishi is just too rich for politics?

Britain tends to be no country for reverse snobbery, which is why Labour’s class-war attacks always misfire. Wealth, here, tends to cause more interest than resentment and no one really minded that Sunak, a self-made multi-millionaire in his own right, would move into (and, from his own pocket, redecorate) 11 Downing Street with a wife who was worth over £500 million. No one criticised Sunak for being rich: at most “Dishy Rishi” was teased for being suave and having expensive tastes. What mattered was his economic handling of the pandemic, his creation of a furlough scheme that will (for good or ill) define his time in office and whether he could navigate Britain through the economic hazards that were certain to follow the pandemic.

The navigation grew tricky. After going along with the PM’s spending requests, he saw it as his mission to wean the Tories off debt-financed spending – so he insisted that National Insurance rises pay for No. 10’s care home plan. So tax rises went ahead, inflation went up and his approval rating down. Then came the questions about his wife’s financial affairs: did her company still invest in Russia? His response – rather snappy, saying she is not a public figure and doesn’t have to answer such questions – seemed to expose a vulnerability. Which, naturally, his opponents kept pummelling away at. Her non-dom status, when leaked, was incendiary.

The problem in politics is not wealth. It’s that the super-wealthy tend to be super-careful about tax exposure, using methods which – while legal and above board – sound dodgy. This rule is fairly well established. Every so often we see a data dump from the Cayman Islands or some such where people conducting perfectly legal global business are named and shamed as tax dodgers. In fact, they are tax avoiders, not evaders – but the difference doesn’t matter in Westminster. The words ‘non-dom’ is toxic, as are the words ‘offshore’ and ‘tax haven’.

This could be Sunak’s vulnerability now. Those with assets split globally often want to pay tax by jurisdiction: his wife could pay Indian tax in India, American tax on her Californian pad and UK tax on UK earnings. There are complicating factors that mean she can’t wrap it all under one jurisdiction: Indian capital movement laws make it hard to remove taxable assets, for example. When global financial holdings are managed, it’s often done in a tax haven: not to avoid tax, but to avoid double taxation. Or to avoid taxes on a transaction when the proceeds may later be reinvested. But if you touch a tax haven, you can be portrayed as being dodgy.

Sunak could have got ahead of this row by declaring his wife’s non-dom status as soon as he entered government. MPs are banned from being non-doms so there are obvious issues if their spouse is a non-dom. The fact that this was kept secret (the Cabinet Office was told but the PM is letting it be known he was not) speaks to the problems it was going to cause. As you read this there will be at least three dozen investigative journalists going through accounts registered in far-flung islands to try to document the Sunak tax archipelago and find any embarrassing details. So Sunak should make sure he has given a full and final disclosure; that there are no more secrets left to unearth.

To many of his critics, this is not about wealth or even tax but unmasking Sunak: rather than a ‘British dream’ success story, he’s actually a member of the global elite playing at politics while it amuses him but ready to up sticks and return to California at any moment. And that the non-dom scandal has simply exposed his gameplan: his wife is now quite open about the fact that she doesn’t regard herself as a permanent British resident (or domicile) so surely the same must apply to him. This is perhaps the most potent of the accusations against him: not that he’s rich or a tax-dodger, but that his family is just passing through Britain. And that this explains why he seems to have kept his options open with that US Green Card.

Again, I recognise these attacks. My Swedish wife would never renounce her Swedish citizenship. This isn’t because she doesn’t want to settle here but (for the sake of argument) if her family became ill and she wanted to go back and look after them, she’d like that option. If she later on decided that Britain wasn’t working out for her, I’d move back to Sweden with her – just as she came to Britain for me. That’s the case in a lot of mixed-nationality marriages. I don’t think that makes me any less patriotic (to Scotland and Britain) but I’m mindful that someone can attack me as a kale-munching Europhile. And if they do then: guilty as charged.

Fundamentally, Sunak has a good story: he made his own fortune fairly through his talent and entered politics to give something back – when he could have made far more money had he stayed in the private sector. (The same is true for Sajid Javid and Nadhim Zahawi.) As for Akshata Murthy, she is precisely the kind of person we want in Britain having already invested in UK companies and donated to UK charities. The Sunaks showcase Global Britain very well and I’d argue that, in general, the country needs more couples like them. 

If Sunak has been straight over the situation and there’s not some fresh scandal about to break then he should get through this.  if he hasn’t, we should find out soon enough.