By Charlie Kimber
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Sunak tax scandal is a chance to bring down the Tories

Chancellor Rishi Sunak's family tax arrangements reveal that, like all rich people, he thinks tax is for 'little people'. However, the growing crisis is a chance to get rid of the Tories.
Issue 2800
Boris Johnson sit on bench in Canary Wharf

The rift between Boris Johnson and Rishi Sunak over Sunak’s tax arrangements is damaging the Tories

Groups of Tory advisers last weekend were swapping WhatsApp messages about “Rishi Notax and Akshata Murky”— the chancellor and his wife. At the same time, the removal vans arrived to shift the pair’s furniture from their flat in Downing Street. The move had been planned for a while. But it was a reminder that Sunak could, and should, be forced out by the revelations about the couple’s tax affairs.

It’s a story of multi-millionaires and billionaires wallowing in their wealth and finding mechanisms to protect it from interfering tax authorities. It’s about the man who determines tax policy not revealing his wife’s special arrangements until he was forced to. And it’s another example of the rich stealing from working class people.

Sunak has always said he is a “low tax chancellor”. He is—for himself and his family, while he puts up taxes for workers. Sunak, for example, held a US green card that gave him permanent residence in America and an obligation to file a US tax return before he was an MP. He retained it until 2019 when he was chancellor.

When Sunak was appointed chief secretary to the Treasury in 2019 he waived his salary for five months. Instead, he earned the MP’s basic salary, which was then £81,932. This is about $103,000, just under the maximum threshold of $108,700 that US green card holders can earn overseas and avoid paying US income tax. Last week it came out that his wife, Akshata Murty, the daughter of an Indian billionaire, has been using non-domicile status to avoid paying British taxes on her massive overseas earnings.

Some 75,700 individuals now claim non-dom status, thereby dodging £8 billion in taxes and national insurance. Sunak said Murty’s tax arrangements are “complicated” and claimed they did not involve her paying less tax. In fact not paying tax on her foreign earnings would have saved her at least £4.4 million last year. Murty and Sunak have still failed to explain how much tax she paid on the £54.5 million of dividends she collected over the past ¬seven and a half years.

Sunak said his wife paid all taxes due in Britain, “and every penny that she earns internationally, for example in India, she would pay the full taxes on that”. “Would pay” doesn’t mean “has paid”. There has been no promise to pay the £20 million she has saved from the arrangement in the past decade. And she has previously collected other dividend income in Mauritius, a tax haven.

Murty has retained her non-dom status, which means her estate will still be exempt from inheritance tax on her assets. Her father is one of India’s richest men with an estimated £3.5 billion fortune. If Murty chose to give up her non dom status, she would face a likely inheritance tax bill of £462 million if her father dies before her and his assets are divided between Murty, her brother and her mother. In India there is no inheritance tax and under a loophole included in a British-Indian treaty in 1956 her inheritance tax-free status would continue forever.

It is, once again, just as with Boris Johnson and the lockdown parties, one rule for the Tories and the rich, another for the rest of us. For them paying tax is voluntary. And it is still a game for them. Perhaps Johnson leaked Sunak and Murty’s tax arrangements in order to bolster his own position. Sunak, who wouldn’t support Johnson during partygate, now feels the wrath of the media and of millions. Meanwhile Johnson basks in his war image.

They laugh at us while they stash their wealth, don’t pay tax, and sentence us to hard times.

Was health secretary Sajid Javid’s loot stashed away on an offshore island?

Tax avoidance doesn’t stop with Sunak and his family. Health secretary Sajid Javid had non-dom status, and did not pay tax in Britain on his overseas income for six years when he was a banker grabbing up to £3 million a year. Faced with imminent newspaper revelations, Javid admitted that between 2000 and 2006, he had non-dom status.

He said he was entitled to this because his father was born in Pakistan. He issued a statement explaining he also benefited from an offshore trust—often dubbed a tax haven— while he worked for Deutsche Bank 20 years ago. But Javid left open where he was officially domiciled for some portions of his loot.

The Sunday Times newspaper commented, “That leaves open the possibility that some of Javid’s assets were located in a tax haven, or that he paid no tax at all on some of them.”

The cheating Tory was chancellor between July 2019 and February 2020. He left after refusing demands to fire his team of aides following rows with Johnson’s senior adviser Dominic Cummings. During the 2019 election campaign, as chancellor, Javid boasted the Tories had introduced more than 100 measures to “tackle aggressive tax avoidance and evasion” in order to make the tax system “simpler —and, most importantly, fairer”.

This is not a ‘cost of living crisis’. It’s a social emergency

These grubby manoeuvres come at the same time as the Tories are hammering ordinary people with tax rises and curbs on pay and benefits. This Monday saw the biggest fall in the real value of the basic rate of benefits in 50 years. The 3.1 percent “increase” that came into effect is 5 percent below the RPI rate of inflation now—and it’s rising.

Recent Joseph Rowntree Foundation (JRF) says that this decision will pull 600,000 people into poverty, around a quarter of them children. This follows a decade of strangled benefits—a material and ideological assault on people who ministers demonised as “shirkers”. The basic rate of unemployment benefits is at a 35-year low in real terms.

Peter Matejic, a deputy director at JRF, said, “A decade of cuts and freezes to benefits has left many people in our society in increasingly desperate situations, struggling to afford food, energy and basic hygiene products. “Without urgent action from the government, the stark reality is that the situation could get much worse.”

The revelations also come just as the cost of essentials is rocketing. The Resolution Foundation think tank said the number of people in England in “fuel stress” doubled overnight from 2.5 to five million on 1 April as average gas and electricity bills soared by 54 percent. It means a household is spending more than 10 percent of its total budget on energy bills, and for many, it’s far more.

The squeeze on living standards is often referred to as a “cost of living crisis”. But that doesn’t reflect the scale of the hardship and poverty. Instead, it’s a social emergency where vast numbers of people face cold, evictions, ill health, hunger and, in some cases, death. The only proper response is to push for mass protests and strikes, riots and the ejection of Sunak, Johnson and this whole government.

Labour and unions must not be bystanders

The Tories cannot be allowed to get away with it again. Boris Johnson and his gang should have been forced out by the “partygate” scandal of cheese and wine gatherings during lockdown. But they have so far managed to wriggle away without any real punishment.

Here they had a willing accomplice—Keir Starmer’s Labour Party. It played a key role in giving Johnson strong hopes of an escape. Pleading the cause of the national interest, the Labour leader restricted his attacks to parliamentary manoeuvres. Crucially, he now backs Johnson over the Ukraine war.

But the tax scandal shows the Tory crisis is not over. The latest revelations show that the entire Tory bunch are vulnerable—especially the chancellor, Rishi Sunak and the health secretary Sajid Javid.

The trade unions should mobilise to throw them all out. They should urge wider strikes, coordinated action and mass protests.

It’s a tragedy they didn’t do that during Theresa May’s Brexit crisis in 2019. And the union leaders were passive as Johnson partied and people died. Now it ought to be different. The TUC union grouping has called a national demonstration in London on 18 June over the cost of living, pay and workers’ rights.

Everyone who hates the Tories needs to build it as big as possible. But more than two months is a long time to wait for even a glimpse of action. Mass action is needed now so that the Tories cannot escape again.

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