By any standards, Rishi Sunak is a rich man. We know that he’s got a 40ft swimming pool and a gym complex at his beautiful manor house in North Yorkshire, one of his four homes. We are also aware that his wife is a software heiress and, as a family, the Sunak family has more wealth than the King and Queen of England.
And we now know that he’s earned a total of around four million quid a year in the past three years from dividends on investments, the disposal of assets and, less significantly, his day job. The publication yesterday of his tax returns for the past three years also showed that, in the past financial year, he also contributed £432,000 to the Exchequer in tax. All above board. All legit.
So, what does this exercise in clarity and disclosure achieve, other than to satisfy a not entirely healthy voyeuristic tendency among the public to know how our next door neighbour can afford a new extension, or, in Mr Sunak’s case, where the money comes from to heat his swimming pool?
As it turns out, the overwhelming majority of his earnings – £1.64m out of a total income of £1.9m last year – comes from selling shares in companies in which he has invested. Good for him. He’s clearly used his considerable resources to make some wise investments, and the really clever thing is that the profit he makes on the sale of shares is subject to capital gains tax, the rate for which is 20 per cent. The tax he pays on his parliamentary salary of £156,163 is at a 45 per cent rate.
There is nothing improper in any of this, although the fact that the blended rate of tax on his total income is around 23 per cent doesn’t sit well with an electorate paying proportionately greater amounts. More importantly, it has shone a light on a tax system in which wealth is taxed less than work. Whether you think that’s right or not, or even moral, will probably depend on where you sit on the political and socio-economic spectrum, and the importance you attach to the encouragement of entrepreneurial zeal.
Certainly, Angela Rayner, adopting the class struggle pose that comes naturally to her, says that Mr Sunak’s arrangements “reveal a tax system designed by successive Tory governments in which the prime minister pays a far lower tax rate than working people.” She is not wrong, and if this opened up a debate about the fairness of our tax regime, it will turn out to have been a worthwhile exercise.
Inevitably, though, attention was focused on the personal and the political. But tax is a fundamental question for society, and the paying of tax is a moral issue. I have long thought that we should celebrate those who pay the most in tax in a given year, and the top people on that list should be honoured, and lauded as national heroes.
In Norway, where everyone’s tax returns are made public, the newspapers print an annual roll call of the country’s biggest tax payers. Paying tax is seen as a moral duty, and applauded. Sunak has paid more than £1m in tax in the past three years. That’s a significant sum of money, however rich you happen to be. We shouldn’t focus so much on what he earned, and where it came from, and what tax band he was in. We should acknowledge that, in this narrow respect at least, he has served his country well.