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The points that have been made are important, but it would be most unfortunate—I have had this view expressed to me by many Australians and I have discussed it with people at high level in the Australian Government, and I believe that the same would apply to all Commonwealth people—if our Government in the United Kingdom, and I look on it as “our” Government because I have lived here so long, suddenly said, “All Commonwealth people are unwelcome unless they suddenly become British”. That would be a dramatic change from the marvellous tolerance that Britain has always had towards people from all parts of the Commonwealth. That is why this is called the mother country, because it has always been so welcoming and supportive. To turn around and say, “Sorry, you’re all out if you’re Commonwealth” would provoke a pretty bad reaction, not only in Australia but in pretty well all the Commonwealth. I return to the same point: domicile. If domicile were not in the Bill, I would have no objection to the taxation issue.
Lord Goodhart: The noble Baroness’s speech was, in many ways, refreshing. For the first time in the debate we have actually got on to serious issues. The noble Baroness did not discuss silly points about the status of the island of Rockall.
Lord Trefgarne: That was not a silly point at all. It was quoted as an example of the idiosyncrasies that are contained in the Bill.
Lord Goodhart: That remark only reinforces my view about the silliness of that discussion.
Lord Goodhart: My view or my opinion, whichever you prefer.
The noble Baroness must be taken seriously here, but there is nothing in the Bill that would require her or anyone else to give up another nationality in order to remain a Member of your Lordships’ House. That is perfectly plain. The Bill does nothing about nationality. However, if the noble Baroness wished to stay in your Lordships’ House as a Member, as I certainly hope she would, she would be deemed for tax purposes, but for no other purpose, to be domiciled in this country. I recognise that this point concerns her, but it is right that those people who have the privilege and the duty of taking part in the governance of this country by being Members of your Lordships' House should accept that that carries with it the obligation to pay
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The real problem is that there are a small number of people, some of them very important supporters of party funding, who have relied on the fact that they can claim foreign domicile to exclude themselves from liability for any income other than the income which arises in this country. I know that the law has been changed somewhat in recent years, but it still means that there is a limit, which is low for the very wealthy, on the amount of tax they have to pay in this country, which would be lower if they were domiciled abroad than they would have to pay if they were domiciled in this country.
For the very small number of people concerned, we are saying that it is right and proper to require those who are in fact not domiciled but are Members of your Lordships' House to pay the same tax they would have to pay if they were domiciled here. That is why I believe that the inclusion of “domiciled” is an important step forward which will be essential if we are to avoid the fact of unequal tax burdens among Members of your Lordships' House.
Baroness Gardner of Parkes: Will the noble Lord explain to me, then, why Clause 1(1) uses the phrase,
Australia has a double taxation agreement with the UK, and for the tax I now pay there I will get credit on money here. Is he saying that the Australians would not charge me or that I would pay all that tax in Australia and pay it all again here without any relief? That is quite significant.
Lord Goodhart: As I understand the situation, the noble Baroness is right that the dual taxation treaty would not apply. However, I think that any taxation she was required to pay in Australia would be deducted from what could be set against her liability to pay taxation in this country. I accept that the noble Baroness may have a point with regard to dual taxation treaties; that is a point that we should perhaps look at again.
Lord Strathclyde: I knew that this debate would prove interesting, and I have been proved correct. We have all learnt a little something about domicility and tax residence, and no doubt we will learn a great deal more.
Most of us start from the proposition that UK legislators should pay UK tax. The trouble is how we get from there to trying to put that into law. One of the reasons why I am in favour of the Government coming forward in due course with legislation on this matter is that they have the knowledge, resources and ability to consult widely, with Green Papers, White Papers, and so on, to make sure that we get this kind of thing right instead of having the rather tortuous discussions that we have had today.
I am not quite sure why the Liberal Democrats have been so upset about the time that has been taken on this amendment when I think of my noble friends who sit on the Front Bench and have to listen to Liberal
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This Bill is about who should not sit in the House of Lords. It is worth looking at some of those people on whom it might have an impact, because it raises questions about all those who are born abroad but who make their homes in this country and are appointed to the House of Lords. At Second Reading, I raised the question of the noble Lord, Lord Paul. He is undoubtedly extremely proud of his birthplace, but he has made his life in the United Kingdom, has employed many tens of thousands of people over the years and plays a major role. Under the terms of this Bill, he would be out. My noble friend Lady Gardner, who spoke with great eloquence this evening, is rightly proud of her birthplace and her heritage. She pays tax in Australia, as she pointed out, but she has made her home here. Although the noble Lord, Lord Goodhart, said that she would not be excluded by the Bill, that is not what I think it means, and perhaps the Government may have another view.
There are other, more obvious examples. I have to admit that I have not seen the noble Baroness, Lady Dunn, in this House for some time, but she could come back here and introduce useful, important and relevant debates about what is happening in the Far East. She has been a Member of this House for a long time. I have no idea how much tax she pays in this country—I could not possibly comment on that—but the Bill would stop any future Lady Dunn being able to sit in the second Chamber of these Houses of Parliament. Quite recently, Lord Cooke of Thorndon was a distinguished Member of the Cross Benches. He was a judge from New Zealand, who gave great weight and authority to our deliberations. But he would be excluded as well—as would many others. I do not know yet whether that is really the noble Lord’s intention.
It was extremely useful for my noble friend Lord Astor to read out a passage— which I had forgotten—from the White Paper that the Government published last year about their view of the international net of people who could come and sit in a second Chamber. For a while, the newest Minister, the noble Lord, Lord Davies of Abersoch, was sitting on the Front Bench. Again, I cast absolutely no doubt on his tax status, but he is a very good example of somebody who has spent a large part of their life working abroad in international finance and has now come to the House of Lords. It is perfectly possible that, for a period, he was paying his taxes elsewhere. Would he be excluded from taking his place in the House of Lords until he had sorted out those aspects? I do not know. I see the noble Lord, Lord Puttnam, who I know has spent a large part of his life working in Hollywood and, no doubt, has paid a substantial fortune to the American Government. But he should certainly not be excluded from sitting in this House. This Bill slams the door permanently on people such as him.
As my noble friend Lord Selsdon pointed out, many of those countries that he listed contain loyal subjects of the Crown. Many of those countries have double tax arrangements with the United Kingdom.
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6.15 pm
Lord Hunt of Kings Heath: I am sorry that the noble Lord, Lord Strathclyde, mentioned the Marine and Coastal Access Bill. I had hoped to escape the pain for just a day.
I follow the noble Lord, Lord Strathclyde, by commenting on the general principle of the Government’s response to the Bill proposed by the noble Lord, Lord Oakeshott. I am glad that he has allowed us to debate these matters again, because they are important and deserve to be taken seriously. The Government agree with the principle of no representation without taxation; clearly, paying tax in this country is an important demonstration of one’s commitment to it, and it is important for legislators to demonstrate that commitment. The noble Lord knows—and I do not want to repeat what I said at Second Reading—that we have reservations about how he has approached the issue in his Bill. However, because of the importance of the matter, the Government are reflecting on how the issue might be taken forward in other ways. I noted the comments of the noble Lord, Lord Strathclyde, on that.
Clearly, there are important questions about the relationship, and whether individuals should be required to be domiciled and resident in the UK for tax purposes in order to donate to political parties. It is likely that we shall shortly be discussing those matters as part of the debate on the Political Parties and Elections Bill, which I think is soon to reach your Lordships' House. But my job is to comment on some of the technical aspects of the noble Lord’s amendment, which would make a major change to the UK system of taxation by making citizenship the basis of taxation. The UK tax system is based on residence, and we have no plans to change that.
The definition of British citizenship is laid out in the British Nationality Act 1981 and the British Overseas Territories Act 2002. We have no plans to amend those further at present. There is a problem with having a separate definition of British citizenship for the purposes of this Act, because there would be potential for considerable confusion. Would British citizens, for the purpose of this Act, have the same rights and responsibilities as British citizens under other Acts? If they did, what would be the implication of granting full British citizenship to people who are citizens of more than 15 other countries in the list that the noble Lord has included in the amendment? That would have to be considered very seriously.
The amendment requires Members to be British citizens. The noble Viscount, Lord Astor, has already pointed out that citizens of the Republic of Ireland, for instance, are also eligible to sit in the House. The Government made it clear very recently that we have no plans to change that arrangement. The fact is that, currently, those eligible to be Members of this House are British citizens, including the Crown dependencies and qualifying British overseas territories, citizens of Commonwealth countries—and we have heard from
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Viscount Astor: I believe that the Government have said that they will expect any person in coming to this House in future to be resident, and the Appointments Commission has also said that. Equally, I do not think that the Government have made—and I am not aware of the new chairman of the Appointments Commission, the noble Lord, Lord Jay, having made—any statement on domicile. Is it the Government’s intention that should a candidate for inclusion in your Lordships' House come forward from the Republic of Ireland, they would be in favour of following the proposal of the noble Lord, Lord Oakeshott, that that person would have to change their domicile from the Republic of Ireland to one in this country?
Lord Hunt of Kings Heath: I do not think that that is the case at all, but I am most grateful to the noble Viscount for his assiduous reading of the White Paper. Noble Lords have been somewhat unfair on their commentary on a very well written and well ordered document, which shows all the signs of the coming together of the major political parties and the consensus that was achieved. I was disappointed that he referred to the greenness in it. There is an awful lot of whiteness, with a touch of greenness around such minor issues as which form of electoral system might be adopted. The White Paper represented a very strong political consensus. Noble Lords will know that the Government’s firm view is that these matters should be put to the electorate at the next election. Following that is the time to consider major reform of your Lordships’ House.
I was about to say that there is the question of double taxation. It is really the point raised by the noble Baroness. The amendment allows those individuals in subsections (1), (1A)(b) and (c) to have dual citizenship. At the same time, the amendment deems people domiciled and resident for tax purposes in the UK and in no other country. On our reading, people in this category could be asked to pay tax in the country where they hold their second citizenship. The UK would have no jurisdiction over another country’s tax law to avoid that possibility. Therefore, it would be potentially impossible for an individual to hold dual citizenship and be deemed domiciled and resident in the UK and no other country. If these difficulties were overcome, the possibility of double taxation for them would remain. The noble Lord will have to think about that.
I shall not comment on Rockall, save to say that given the time we are spending on the Marine and Coastal Access Bill, we might as well have the noble Lord, Lord Trefgarne, join us to talk about these important matters.
On the more substantive point of lists, I would say to the noble Lord, Lord Selsdon, that if I were adopting his approach, I would not list countries in the way he has done. If I did, I would have an order-making power that allowed amendments to be made. Governments do not like lists, and it is for a very good reason.
The noble Lord, Lord Strathclyde, referred to my noble friend Lord Davies when he was not in his place. I am glad to say that my noble friend has always paid tax in this country.
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Lord Strathclyde: For the avoidance of doubt, and since the noble Lord was not there when I spoke, I was not for one moment suggesting that he had not. My example was entirely different, and was that those who make their living abroad should not be excluded from being Members of the House of Lords. There is an even more powerful point. An existing Member of the House of Lords may, having spent a few years, say, on the Front Bench, be offered a job running a great bank or something else overseas—perhaps not such a great bank—and under the terms of the Bill they would be excluded for life. It is on that idea, which we will return to in future amendments, about being excluded for life that we need to tease out from the noble Lord, Lord Oakeshott, exactly what he means.
Lord Oakeshott of Seagrove Bay: That last point highlights how unsatisfactory—indeed I could probably go further than that if I was not feeling so good-natured today—and unfortunate has been the way in which the Conservative Benches have used the first hour and 10 minutes of this debate. I would say to the noble Lord, Lord Strathclyde, that that point is in the next group of amendments and when we get on to that we can discuss exactly that. It would have been helpful if we had not had such extensive excursions around the wider shores of the British Empire, particularly from the noble Lord, Lord Selsdon, as we could have made some serious progress in dealing with just that point. We discussed the point before, and we have tabled substantive amendments on it.
On the amendment put forward by the noble Lord, Lord Selsdon—I must say that I believe the House has rather lost its way on this amendment, whether by accident or design—we are not talking about asking people to change their citizenship. There is no reference to citizenship in my Bill. It is a very simple Bill: the key provision asks Members of this House to make a very simple choice as to whether they wish to be fully resident and domiciled and pay full British tax in this country. If they choose not to do so, they are free not to do so, but then they leave the House.
I say to the noble Baroness, Lady Gardner, that the case for non-doms in particular is whether they would be taking advantage of the £30,000 by which very rich non-domiciled people do not then have to pay tax on the rest of their worldwide income. That is a critical question, which, again, we will come to.
I must disagree with the noble Lord, Lord Strathclyde. The Bill is in no way slamming the door permanently on some of the noble Lords whose names he mentioned. All they would have to do would be to decide whether they were prepared to pay full British tax on their worldwide income or not.
It is only right that I should clarify the question of the report in the Daily Telegraph by its political correspondent Rosa Prince on 23 February. As I understood it, the noble Viscount, Lord Astor, accused me of saying that he had said that Peers should not pay tax. To clarify, I shall read out the relevant section of my article, which I stand by. The point of the article was to draw attention to what the Conservative leader David Cameron had said at his press conference. When asked about my Bill on the record, he said that it was “not a bad idea” and “deserved to make progress”.
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“If discussion of the amendments takes too long, then under House of Lords rules the entirety of the proposed legislation would fall”.
We have had a good example tonight of why I said that and why I say it again now. I in no way said that the noble Viscount, Lord Astor, said that people should not pay tax. I said a very specific thing, pointing out the contrast between what the Conservative leader was saying and what the noble Viscount was doing.
Lord Oakeshott of Seagrove Bay: I was asked to quote from this article and so I shall. It said:
“Lord Astor ... denied his amendments were ‘wrecking’, and added: ‘Lord Oakeshott’s Bill is not going anywhere—it hasn’t got a chance’”.
I thought that I would give noble Lords something to chew on.
Lord Strathclyde: Before my noble friend stands up, I should point out that the noble Lord, Lord Oakeshott, used the word “filibuster”. I hope that he will explain to the House where he thinks that the filibuster has taken place. I hope that he will do so in great detail. I have not noticed any filibuster. I have been in this House for 20 years or so. I assure him that I have seen filibusters, and this is a long way from a filibuster. We have spent only an hour and a quarter on this amendment. That is not a filibuster at all. I object to that charge.
I suspect that the reason why my noble friend said that the Bill was not going anywhere is that it is not supported by the Government or the Opposition. Many Peers from all around the House have spoken against it. I ask the noble Lord, Lord Oakeshott, what on earth gives him the view that it could go past this House, given that nobody, apart from a few of his noble friends, supports it.
Lord Oakeshott of Seagrove Bay: How nice it is to be able to say a few words on my own Bill. If the noble Lord, Lord Strathclyde, does not recognise a filibuster when he sees one, perhaps he would like to go and read the 28-minute opening speech of his noble friend Earl Selsdon. I was just clarifying, because the noble Viscount, Lord Astor, accused me of something that I did not say. It is on the record. Now, may I—
Baroness Farrington of Ribbleton: It would be extremely helpful if noble Lords spoke moderately and intervened when essential.
Viscount Astor: I am grateful to the noble Lord, Lord Oakeshott, for what he said about the article in the Daily Telegraph. There is no disagreement between
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However, when I said that the Bill was not going anywhere, I was not making a statement on my own grounds, I was quoting the Minister, who said that he did not think the Bill would go anywhere. I have two questions for the noble Lord. Is it correct that he is disagreeing—
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