April 9, 2022•478 words
rentier /rã-tyā/ noun
- A fundholder
- A person who has, or who lives on, an income from rents or investments
Kevin Hollinroke, a johnsonite MP, said this about non-dom status on the BBC's Today programme:
This is not a tax dodge. It is a deliberate policy to attract wealthy people from other countries around the world to the UK on the basis that they create jobs and create wealth in the UK that benefits everybody.
[Quote via The Guardian.]
Hollinroke is, unsurprisingly, dissembling, or perhaps merely too dim to understand what he is talking about. Non-doms create money and wealth if they are doing something to do so: being very rich does not on its own magically generate economic activity (apart, perhaps, from employing some servants, and keeping very expensive restaurants in business). In particular, rentiers do not generate economic activity: they just passively live off the income from their investments.
Akshata Murty is a rentier: she owns £700m in shares in Infosys, an Indian IT firm, from which she received £11.6m in income last year. She did nothing to earn this income: she was given these shares by her father, N. R. Narayana Murthy, a billionaire and one of the founders of Infosys. She may be economically active, but she is nothing like as economically active as someone running a company in the UK from which they received this income, for instance: she is, again, a rentier.
There is nothing illegal about being a rentier, and arguably nothing inherently wrong about it. However it is clearly not the case that Akshata Murty creates either jobs or wealth in the UK: she is simply living off her unearned income. Allowing her to be a non-dom has no possible benefit to the UK: it is, purely and simply, a way she is using to avoid paying tax in the UK on her unearned income.
It should be quite surprising that the rules around non-doms allow rentiers, but given the corruption at the heart of the UK government it is not. Bribing politicians is part of the cost of living for kleptocrats who want to spend time in the UK, and is not expensive, by their standards. Indeed, the £30,000 yearly fee to maintain non-dom status is essentially just one of those bribes.
What is quite surprising is that Rishi Sunak was stupid enough not to see that this might look a little bit bad for him. Perhaps he is so protected from reality by his vast wall of money that it simply never occurred to him that other people might object to this sort of behaviour by
And, of course, even though Akshata Murty has now graciously agreed to pay the tax she was avoiding, she hasn't given up her non-dom status. So in due course £280m of inheritance tax won't be paid in the UK.