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Lord Selsdon: First, I would like to remind the noble Lord of certain procedures in this House that have not necessarily been followed. I do not put this down to his youth or to his lack of time here, but over
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The second question to the noble Lord, Lord Oakeshott, relates to the impact of the Bill and who it is intended to impact upon. I could go on for quite a long time with these questions, and the noble Lord would prefer that. I would like to ask whether he or the Liberal Democrat party has made an assessment of how many people may be impacted upon by the terms and conditions in the Bill; that is, Members of your Lordships House. Perhaps I could ask that, sit down and then jump up again.
Lord Hunt of Kings Heath:I do not know if I can assist the noble Lord. The normal rule in Committee allows interventions, but it might be better if the noble Lord puts his points, other noble Lords speak, I then give a government view and the noble Lord, Lord Oakeshott, winds up. Would that be acceptable to the Committee? It seems to me that that is the way we should go.
Lord Selsdon: The Bill, relating only to the House of Lords, raises an issue that I think should have been raised in a general purpose debate and then discussed within the House and the usual channels. It should not be presented in this way, as an attempt to drive through Parliament a Bill that impacts upon a particular group of people. After what was said, not recently, by the Conservative Party in an article attacking the noble Lord, Lord Sainsbury, who was a very good Minister and did a lot of good for this country, and what was said by others who, in the attempt to deal with cash for peerages, sought to knock each other and Members in this House, which is not normal practice and never has been, my concern is that within the international community in London, where I have worked, on and off, all my life, there is now a groundswell of nervousness and anxiety. It was started by Mr Cameron when he made a political speech saying they would tax foreigners in order to pay for a lack of Treasury revenue. That
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The worry hereI cannot nod my headfor me is the impact upon the economy. Without wishing to bang on, but I shall bang on for a bit, I want to take noble Lords back to the basis of the economy which historically, when I was involved in the trade world, was based upon balance of payments surpluses, mainly in manufactures. For years we had surpluses in manufacturers because we were a manufacturing industry. Then at the time when I was on the Audit Committee with the noble Lord, Lord Ezra, and others in this House, we looked for some years at what would happen to the economy when oil ran out. I have to say that we were not predicting $100 a barrel or anything like that, but it was said that that was the time when the United Kingdom should reinvest heavily in other activities and industries. There were investments. There were high-tech investments. There was a silicon valley, where 50 per cent of all the computers in Europe were made, in Scotland, near Glasgow. There was also the silicon road down to Bath where high technology came and service industries began to spring up. But gradually the manufacturing base was eroded almost completely. Even some of the more brilliant developments, such as the Dyson machines, were made outside the United Kingdom. So the balance of payments in our economy ceased to be based on manufactures. It was therefore based on services.
In the days when I was on the committee for trade in invisible exports, services were deemed to be financial services such as insurance, banking, accountancy and consultancy activities, but there was also a range of other smaller manufacturing and service industries. Gradually, other than at the high level, many of these services have been exported, for example, telephone answering systems, to India. So what is the basis of the economy? It is not based just on the City of London. At the high-tech level, particularly in medical research and health, we are very advanced in the engineering but we are not very good at the application. The noble Lord, Lord Desai, and I have discussed these matters for many years.
I am worried that the statements that have been made about taxation are causing concern among members of the international community living in London and the United Kingdom within a free market economy. I may be wrong but this area is a large part of my life. I have been president of the Anglo-Swiss Society for many years. Its members always agree that taxation is a trade weapon. We have used it as such in the United Kingdom in giving tax allowances to people who built ships and people who imported things and then reused them. We started business capital leasing in a big way and even double-dip leasing. We led the field in airlines not owning their own airplanes.
Lord Wallace of Saltaire: I note that we are now in Committee. I recall the Standing Order that says that long speeches tend to weary the House. The noble Lord is in his 15th minute. For the last five minutes I have not managed to understand the relevance of his
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Lord Selsdon: That is very good as the noble Lord has always proposed harmonisation of taxation. As I say, I may be wrong, and I shall be pleased if I am proved to be wrong. However, at the moment, there is confusion about domiciled residence and ordinary residence. The Bill uses the word domiciled. Obviously, if you are born and brought up in the United Kingdom, you are domiciled in the United Kingdom, and will be for ever and a day. The noble Lord will correct me if I wrong.
Lord Goodhart: When I was born my father was, and continued to be for the whole of his life, domiciled in the USA. I acquired domicile of origin of the USA because the rule then was, and still is, that a child acquires the domicile of its father at the date of birth. I ceased to be domiciled in 1966 when the
Lord Goodhart: I am grateful to the noble Earl for that intervention but it may be convenient if I point myself in the direction of the noble Lord, Lord Selsdon, who raised this point. It was only when it became clear to me by 1966 that I was going to make my life permanently in the United Kingdom that I recognised that I had acquired, and should be treated as having acquired, a domicile in the United Kingdom.
Lord Selsdon: That relates to the noble Lord himself, and I am not necessarily talking entirely about British subjects. My concern here, which is probably not real but perceived, is that there is a groundswell of opinion that all foreigners working in London will have to be domiciled there and pay tax on their worldwide income. That is a real fear. It would be helpful if the Liberal party could perhaps give the assurance that that will never be the intention. Domicile is not necessarily a matter of fact. Certainly for non-British nationals that is not the case, and it depends on your marital status and where you come from.
As President Sarkozy said the other day, London is the sixth or seventh city of France. There may be 750,000 French subjects in this country paying tax on their British income but not necessarily paying tax on their mortgages in France or other benefits. That has always been the case with the international community. Therefore, the employees have no objection to paying tax in this country and I do not think that any member of the international community objects to the principle of having a tax levy placed on him. Historically, it was a fairly simple matter. I speak from some practical experience. If you worked in this country and you were a foreigner, you had to show that you had an income of £25,000 a year and you paid tax on that. That was in the early days. When I was in the banking world and we employed people, that was the case, but you did not pay capital tax on other issues. Equally, if you were a British subject working abroad, you were allowed to have 25 per cent of your income paid tax free.
The clear thing about taxation is that it should be transparent. My worry is that this Bill as presented to the external world may cause concern, because it might lead to a perfectly reasonable statement that this should apply to the House of Commons and possibly to those in elected Assemblies in the United Kingdom, who number in general 106,203local authority is another level. The principle is there. The difference is that, other than a few of us in your Lordships House, no one is elected. The other difference is that no one here receives a salary in this field. My wish is that the Bill could be changed somewhat. I will speak later to the amendments suggesting that certain people should be excluded.
Within that framework, we come to the existing 734 Members of your Lordships House. I would willingly read out all the writs of summons and provide everything, because in this world I have probably more information on your Lordships House than anyone else. I did the original report for the Labour Party and I have had this stuff for over 45 years. I feel quite concerned that, even in the 1999 Act, people ignored the Commonwealth. There are 1.8 billion members of the British Commonwealth, which represents 30 per cent of the population and 20 per cent of the land area of the world. The assumption here is that no member of the Commonwealth may become a Member of the House of Lords unless he becomes domiciled in the United Kingdom and leaves his country behind.
Equally, within that framework, one must accept that one of the main revenue streams of the poorer countries, particularly in the Caribbean, is financial services. Those may not appeal and hold no interest to the Members in the Liberal party, who are assembled in serried ranks as though they must have a Whip on for something that is really not that important. That makes it look even worse; if it is presented to the outside world that the whole Liberal party believes that doms, or non-doms, or whatever, should be taxed, that is a worry.
I can produce representations that have been made to me. At the moment, the money flowing out of London is very significant indeed, and other people are competing for it. The noble Lord, Lord Desai,
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My life has been in trade and I have dealt with many of the more difficult countries in the worldthe second biggest being Algeria. Some of that trade is in oil. I want some reassurance from all Benches that it is not their intention to pursue further the taxation of people who are working in the United Kingdom as though they were domiciled here. Yes, they can be ordinary residents. Some people may be resident to an extent in several countries, or they may move.
I often represent groups of pensioners internationally. Anyone in your Lordships House can represent whom they like. I represent the 19 million people who did not vote at the last election. I also represent many of the groups abroad in areas where I workedroughly 12 million people.
Lord Selsdon: Then why do noble Lords declare that they have interests? If you declare an interest because you have a public job, are you representing somethingas, for example, in the post offices debate today? I am not being flippant
Lord Selsdon: We are all having a laugh as well, but some of these issues are serious. The problem will not necessarily go away. The dangers here, frankly, are the politicians, of which I am not one; I never have been one and probably never will be. With this Bill in place, all three parties are effectively saying that they do not want people from the international community to be here unless they are domiciled and pay full tax on capital gains and on everything else. I can give noble Lords a list of where these people are, because part of my life has been in this field. Some are good and others are bad. But, in general, Switzerland, which is attracting large amounts of money again, does not have anonymous bank accounts and it negotiates and deals with people, who then set themselves up.
It would probably be better to debate the entire taxation system of international people, but I would like, in this case, the noble Lord, Lord Oakeshott, clearly to define what a domicile is, in terms of a foreign national who is living and working in this country. That may relate not only to a foreign national but to his wife of another nationality. Noble Lords will remember the poll tax; the Government are proposing a poll tax in another form. It is a tax on the individual. I know that it is difficult for me to make myself entirely clear
Lord Selsdon: I think that noble Lords will find that it is relevant. Could I please again have a definition of domicile? The definition is that domicile can be applied to a person in both countries: the host country and the country of his nationality. If you are German or French, you cannot necessarily change your domicile, as the noble Lord, Lord Goodhart, has done. Domicile is the word that worries me. Residency is not an issue, although initially domicile was linked to residency. The amendment would remove the word domiciled. I am suggesting that we either remove the word domiciled or explain it in a way that is acceptable to the international community in London.
Lord Desai: I always thought that this was a simple Bill. The Liberal party, as yet, does not have the power to impose taxation on anyone; long may it remain so. The amendments that have been proposed by the noble Viscount need some discussion. The purpose of the Bill is not to exclude foreignersmoney-earning bankers and everyone else. It is about the tax status of Members of your Lordships House. The simple argument for the Bill is that, if you are going to be a Member of this House, you should be a fully taxpaying person. That is an easy concept.
When I first inquired about the nature of domicile, I was told the story about the grave. I said that I happened to believe in cremation and, therefore, I did not know what I would do. Should I buy a little pot for my ashes? Is that enough to be domiciled? I think that the point is very simple. People take non-domiciled status to escape taxation in this country and we would like them to come clean and be honest if they want to join your Lordships House. If they do not want to do that, they can go and cheat as much as they like. It has nothing to do with me; it is to do with the tax officers. The principle is: if you want representation, you had better pay taxation.
Lord Elton: I did not think that I had heard my noble friend aright when he said that you had to have a grave in order to be domiciled. I did not think that you had a grave until you were dead, so perhaps the noble Lord, Lord Desai, who subscribes to this theory, could explain what it means.
Lord Desai: I should have said that you had to have a plot reserved in your name in a graveyard and that you had to give evidence of that. I went into this when I had no money from which to escape the tax. I found out that even then it was not worth my while buying a little urn for my ashes for the future.
Lord Selsdon: Just on the question concerning graves. There is a lair certificate, which is issued to you in Scotland when you reach the age of 50. You receive it in a letter from the Writers to Her Majestys Signet, and it is also proof of being domiciled.
Lord De Mauley: I should say at the outset that, echoing the words of my noble friend Lord Strathclyde at Second Reading, we have no particular difficulty with the broad principle behind the Bill, which in a nutshell is that there should be no representation without taxation. However, the debate that has already taken place has demonstrated some of the complexities and has started to explain why, as my noble friend Lord Strathclyde said at Second Reading, such matters would more appropriately be dealt with in a government Bill.
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