There is a huge difference between breaking the law and living within the law. However, where Governments of both persuasions and the coalition have put provisions into the tax code that encourage people to save or invest in a certain way in order to pay less tax, that surely is the will of Parliament and the will of those parties, and we cannot object if people and institutions take advantage of it. The right thing to do—as I think the Labour party is now trying to do in some ways—in respect of rich people who come to our country to undertake part of their affairs but not all of their affairs, is to ensure that we have settled on a law that we think is fair and then to enforce it. Obviously we should take a tough line were any of them to break our law, but we cannot object if they take advantage of measures that have been put into the tax code to encourage certain kinds of investing or saving behaviour, in exactly the same way that most MPs take advantage of the avoidance provisions to save through a pension scheme or an ISA.
The subject of this debate is whether the assets of very rich people—often productive assets that they have saved for, earned and accumulated before they came to the UK—are a suitable object of taxation if they choose to do some things in the UK in respect of which they are clearly subject to our law codes and have to pay our taxes. In the past, Labour Governments as well as Conservative Governments have taken the pragmatic view that there is an advantage in very rich entrepreneurial successful people coming to our country setting up businesses, making investments here and committing part of their capital to our country; that we will tax that fairly in exactly the same way that you or I would be taxed, Mr Speaker, if we were making such investments on a much smaller scale; and that that is fair to us as taxpayers and investors, but that it is not our business to try to tax their assets and income accumulated or
earned elsewhere that they have established by other means before, which are presumably being taxed in those other countries and would normally be governed as well by some kind of double taxation arrangement or agreement.
I would therefore just say to Labour Members who think there is a huge crock of gold here, which for some unknown reason successive Labour, coalition and Conservative Governments have been reluctant to pluck, that maybe they did not do it in the past because there is not, and that maybe we are quite close to that point. If we go further and further encroach on the legitimate income and assets of foreigners coming here, which are asset and income not actually in this country, we might get to the point where more of them say, “I’d rather go somewhere else. Plenty of other countries around the world would actually welcome the money, investment and income I wish to spend, which is going to be taxable in that country. If they are prepared to not tax my other income and assets elsewhere, then they will have the benefit of me rather than not.”
The art of taxation is finding the right balance, so the host country gets enough out of it and where there is obviously a fair imposition of tax on anything they do in that country alongside fellow residents of that country, while not deterring so many that we are no longer a great centre for people with money, investment and talent who would otherwise come here.