Global Policy Forum

Ashcroft Violated our Sense of Justice

The case of British Billionaire Lord Ashcroft who is registered "non-domiciled" for tax purposes, yet holds a seat in the House of Lords, has incited scrutiny over UK tax laws.  Although the use of offshore tax havens is legal under UK law, Lord Ashcroft should not be able to cast ballots in a country where he is exempt from tax payments. This article argues that in order to restore public faith in the parliamentary system the law should be changed to forbid anyone from sitting in parliament who is not a full resident of the UK.


By Matthew Elliott


March 5, 2010




"No taxation without representation." The author of those four words that broke apart Britain and what would become the United States over two centuries ago could never have imagined that his slogan would be troubling a British billionaire more than 200 years later. And yet the phrase that drove Britain out of her American colonies now seems set to drive Lord Ashcroft out of either Belize or the House of Lords.


At the Taxpayers' Alliance, we specialise in making the ordinarily dry topics of taxation and public finance interesting. Screeds of numbers and balance sheets may make the financial world go round, but they must be linked into real life to be of interest to the wider public. So how come this story of a businessman and his complex personal tax arrangements has caused such a political storm?


The answer is simple, and it goes to the heart of both our parliamentary system and our national sense of fairness. It clearly violates our sense of justice for a politician to be allowed to vote in parliament on laws or taxes which they will not have to live by.


Lord Ashcroft, as we now know, is one of several members of the House of Lords who are what is called "non-doms". In my view he should - like anyone - be free to choose where he wants to be domiciled for tax purposes. It would be both impractical and deeply illiberal to treat people with worldwide business interests the same way we do someone earning all their money in the UK. The point is not Lord Ashcroft's compliance with tax law; it's his position as a member of the House of Lords.


He should not be allowed to have his cake and eat it. If he wishes to move to a lower-taxed country, let him - hopefully a government of good sense would cut taxes to reverse such a trend. As it is, he has indicated that he will become fully domiciled in the UK for tax purposes should the Conservatives win the next general election, and he should be congratulated for being the first non-dom peer to clarify his position. However, the principle still stands that people who exempt themselves from British taxes should not then be allowed to jet in and vote in the House of Lords. And this situation - along with the new rules surrounding MPs salaries and expenses - should be clarified in legislation before the election.


It goes without saying that the questions about the accountability of the upper house are serious and numerous. The debate over how to sort the Lords out properly will inevitably be fierce, lengthy and complex. The non-dom issue, though, is by comparison immensely straightforward.


The law must be changed to forbid anyone from sitting in parliament who is not a full resident of the UK. This would apply as much to Lord Paul and Zac Goldsmith as much as it would to Lord Ashcroft or any of the other peers who are non-doms. It might also apply to Tony Blair - who Guido Fawkes suggested this week may be non-domiciled for tax purposes - were he ever to accept a peerage.


Without such a change, this issue will continue to eat away at the already low level of public faith in our parliamentary institutions. We have already seen, thanks to Michael Martin, that trying to cover up or ignore any issue of trust is counterproductive. We know from bitter experience that simply assuming politicians will do the right thing does not work. The only solution is to change the law and put a stop to the practice entirely.


As a nation, we have a mountain to climb to rebuild our democracy and our public finances. The electorate rightly feels that their voice is not heard in Westminster, and that as a result they are subjected to excessive legislation and taxation. There is immense resentment against Westminster village, where the costly and invasive rules applied to ordinary people do not seem to apply to the political class.


It is not possible to restore faith in parliament, or to get a legislative process which the public feel to be fair, as long as politicians are allowed to be both a non-dom and sit in parliament.


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