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Can Sunak survive? Viral thread outlines what Chancellor has done wrong

"It is very clear that Sunak subscribes to the idea of tax mitigation within the limitations of the law is acceptable without apparent consideration of the ethical or political consequences."

Joe Mellor by Joe Mellor
2022-04-09 11:26
in News
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Rishi Sunak and his family potentially saved tens of millions of pounds in taxes through his wife’s non-dom status, Labour has said as it sought to maintain pressure on the Chancellor.

Shadow transport secretary Louise Haigh said that while the arrangement was legal, Mr Sunak had failed to be transparent about his family’s tax status at a time when he was raising taxes for millions of people.

“The Chancellor has not been transparent. He has come out on a number of occasions to try and muddy the waters around this and to obfuscate,” she told BBC Radio 4’s Today programme.

“It is clear that was legal. I think the question many people will be asking is whether it was ethical and whether it was right that the Chancellor of the Exchequer, whilst piling on 15 separate tax rises to the British public, was benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds less.”

In a statement Ms Murty, who is to keep India as her “place of domicile”, said she had done nothing wrong but acknowledged some people did not see her tax status as being compatible with her husband’s position.

“I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family,” she said.

“I do this because I want to, not because the rules require me to.”

Thread

In response Richard Murphy Professor of Accounting Practice, Sheffield University. Chartered accountant. Political economist. Co-founder, the Green New Deal, published a thread on the Chancellor and if he can survive.

1.

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After a couple of days of media storm around the tax affairs of Rishi Sunak and his wife, Akshata Murty, on which I have offered an opinion or two, there are still questions to ask, including can Sunak survive? Another thread….

— Richard Murphy (@RichardJMurphy) April 9, 2022

2.

We still do not know the answers to all the questions that arise as a result of this affair, and the emergence Sunak having had a green card in the USA until 2021 and his wife ‘voluntarily’ paying tax certainly complicates things.

— Richard Murphy (@RichardJMurphy) April 9, 2022

3.

Regarding the green card, there are a number of issues. Tax is not one of them. He likely paid more tax as a result. But question as to loyalties do matter and it’s clear a Sunak kept his US residence option open for a year after being Chancellor.

— Richard Murphy (@RichardJMurphy) April 9, 2022

4.

It’s fair to ask in that case to which country his loyalty is due in that case? I’d even ask who he thinks he is acting for? That’s a question that needs answering now. Why is he a politician here if he wanted to live in the US? What’s that really about?

— Richard Murphy (@RichardJMurphy) April 9, 2022

5.

There are also questions of integrity. Holding a Green Card looks pretty incompatible with the oath MPs have to take. And there are also, apparently, questions on whether Sunak broke US law by being a UK politician whilst holding a green card, which seems to be illegal in the US

— Richard Murphy (@RichardJMurphy) April 9, 2022

6.

All these things matter. We need to trust this man’s judgement, honesty and integrity. Can we when he can appear to willingly hold what look to be legally and ethically incompatible positions? That’s a hard ask for any politician to make.

— Richard Murphy (@RichardJMurphy) April 9, 2022

7.

Then there is his wife’s offer to pay tax. My interpretation of Ashtaka Murty’s statement is she’s really changed nothing and remains non-dom but will now say she’s remitted all her worldwide income to the UK on her tax returns and so will pay tax on it here.

— Richard Murphy (@RichardJMurphy) April 9, 2022

8.

However, that ensures that her capital gains can stay out of tax and her estate might well avoid inheritance tax. In addition, we’ve no way of knowing if her income is now in offshore trusts that would then also avoid the UK tax charge.

— Richard Murphy (@RichardJMurphy) April 9, 2022

9.

Worse is the arrogance of this statement. Murty’s one of 0.2% of people in the UK who pay for the right to choose how much tax she pays here. The rest of us do not have that choice. That’s still very definitely one rule for the Chancellor’s wife and another for the rest of us.

— Richard Murphy (@RichardJMurphy) April 9, 2022

10.

All this being noted, and I suspect there is more to come, the politics of this are becoming clearer.

— Richard Murphy (@RichardJMurphy) April 9, 2022

11.

What is the coming very apparent are four things. The first is that both Sunak and his wife have made statements which have been misleading, at best. The most obvious of these was with regard to a claimed relationship between non-domicile and citizenship, when there is none.

— Richard Murphy (@RichardJMurphy) April 9, 2022

12.

The other was a claim between the need to avoid paying tax on worldwide income in the UK and the right to return to India. Again, there was simply no such link.

— Richard Murphy (@RichardJMurphy) April 9, 2022

13.

On both these issues the statements that have been made by Rishi Sunak or spokespeople on his wife’s behalf have not been fair representation of the true situation in the UK, on which point just about every tax commentator in the UK has been agreed.

— Richard Murphy (@RichardJMurphy) April 9, 2022

14.

This might not matter if Sunak was not Chancellor of the Exchequer, but I think we have a reasonable right to expect the Chancellor to get statements about tax right, and to be able to hire suitable advisors if the Treasury can’t help.

— Richard Murphy (@RichardJMurphy) April 9, 2022

15.

If Sunak cannot get issues such as this right, we have a reasonable right to ask whether he can get bigger questions right as well. Politically his failure to attend to detail on this issue, and as a result to issue what appear to be misleading comments, is serious.

— Richard Murphy (@RichardJMurphy) April 9, 2022

16.

Second, it is very clear that Sunak subscribes to the idea of tax mitigation within the limitations of the law is acceptable without apparent consideration of the ethical or political consequences.

— Richard Murphy (@RichardJMurphy) April 9, 2022

17.

In a country where we are dependent upon voluntary compliance with that law, and on most people filing tax returns in good faith and within the spirit of the law, meaning that most do not need their tax affairs investigated as a consequence, this is a dangerous precedent to set.

— Richard Murphy (@RichardJMurphy) April 9, 2022

18.

Third, Sunak’s statements, his green card and his defence of his wife’s tax mitigation and of her claims to not be committed to the UK, all cast doubt upon his own commitment to this country in which he does at present hold the second highest office of state.

— Richard Murphy (@RichardJMurphy) April 9, 2022

19.

Quite reasonably people expect our politicians to adhere to a number of standards. One is to accept the sacrifice that office demands. A second is to put the interest of the country first. Right now it seems that Sunak fails both tests.

— Richard Murphy (@RichardJMurphy) April 9, 2022

20.

Last, the questions that have arisen with regard to Sunak having a green card and for how long he held it opens further issues, not least statements he might have made to tax authorities in one country when a legislator in another.

— Richard Murphy (@RichardJMurphy) April 9, 2022

21.

I am making no suggestion with regard to illegality or dishonesty here, although I am suggesting poor communication needing resolution. What I am questioning is Sunak’s commitment to the UK, his financial ethics, his political ethics and so his suitability to hold high office.

— Richard Murphy (@RichardJMurphy) April 9, 2022

22.

What seems apparent is that at a time of high political stress in the UK Sunak is revealing that he does not have the character, the commitment or the willing to lead the financial management of the government of this country. On all fronts he’s now a loser for the Tories.

— Richard Murphy (@RichardJMurphy) April 9, 2022

23.

So, two questions. First, will he quit? I have a feeling he will. He’s hating being briefed against. He’s unable to understand why it’s happening: the world was meant to love him, he thought. And his wife and her family will hate this too. The chance he’ll just walk seems high.

— Richard Murphy (@RichardJMurphy) April 9, 2022

25.

So, two questions. First, will he quit? I have a feeling he will. He’s hating being briefed against. He’s unable to understand why it’s happening: the world was meant to love him, he thought. And his wife and her family will hate this too. The chance he’ll just walk seems high.

— Richard Murphy (@RichardJMurphy) April 9, 2022

26.

The alternative? Johnson will ditch him by offering him a much more junior post when he next reshuffles, and then he will walk out of both Cabinet and government.

— Richard Murphy (@RichardJMurphy) April 9, 2022

27.

My thinking is Sunak knows his currency with the only community that matters to him – the wealthy – will be higher if he walks of his own accord. I really can’t rule out that he might.

— Richard Murphy (@RichardJMurphy) April 9, 2022

28.

When seen through the lens of political economy – of which I was a professor for five years – which is all about power relationships, what we can see here is that Sunak's power is ebbing away very fast. When will it run out? Who knows? But it looks like it is heading that way.

— Richard Murphy (@RichardJMurphy) April 9, 2022

Related: Best reactions as Sunak’s Green Card revelations leave Chancellor up the creek

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