News that the UK’s revenue commissioners plan to access individual homes to enforce a new wealth tax on £2 million ($2.7million)-plus properties marks a new low in the country’s scramble for finance from its richest.
It is a policy that new Prime Minister Andy Burnham inherited from his predecessor, Keir Starmer, but the buck inevitably stops at the door of 10 Downing Street.
Among those most certain to face this knock on the door is royal couple Harry and Meghan, who are moving back to England from California in time for the new school. Mr Burnham has said in relation to providing for the couple’s security that the return to the UK is a private individual matter, not an issue of state.
As most of the UK media’s coverage surrounding the couple tends to revolve around money, there is another tier to the story of their return to the UK after a six-year escape to the New World. It is perhaps time for Mr Burnham to rethink not only his stance towards the errant prince but also his governing Labour party’s failing tax regime for the rich and wealth creators.
The concerns this week over the new surcharge and inspection regime for homes valued in the millions, which are predominantly in London and England’s south-east, could serve as a moment to go back to the drawing board.
Mr Burnham has brought two elements to his first month in power.
One is that he strikes a note of optimism as he goes about his political message. This is in stark contrast to Mr Starmer who talked the country’s economic and fiscal prospects down in an effort to crush the last remnants of Conservative reputation. Mr Burnham is rolling out a new type of party politics, and we have only glimpsed a fragment of his ultimate vision.
The second is that Mr Burnham knows the intensity of the video-based messaging he must sustain to keep the focus on his leadership in the way that serves his need. In his success at mastering the hand-shot video, the new Prime Minister is explicitly an influencer using his output to shape the agenda.
In this respect, he will no doubt recognise the potency of the Harry and Meghan brand as an image-maker for the UK. Cast in this light, it is possible to see Prince Harry’s return as a gain for the UK in terms of wealth creators on the move.
Although their reasons for quitting Britain in 2017 were rooted in a royal schism, the prince and his actress-wife were at the head of a wave that has seen thousands of the wealthiest leaving.
The UAE has seen its resident population of working Britons rise above an estimated 200,000 in this time as it became one of the leading destinations for aspirational residents quitting the UK tax system. Alongside Italy, Greece and Portugal, the Emirates is a magnet for opportunities tapped by those leaving the UK.
After six years away, some commentators noted that Prince Harry could already count on one tax benefit from his time abroad. Nimesh Shah, a tax adviser, wrote that the couple could avail of capital gains tax exemptions under “temporary non-resident” rules.
There is, potentially, one cloud on the horizon from their time in California if voters there endorse the Proposition 40 wealth tax on the ballot in November: they will be subject to a 5 per cent levy on their wealth as of January 1 this year.
So taxes matter in the movements of Prince Harry and Meghan, and this is something that Mr Burnham could reflect on with his own plans. The signature first budget of his premiership is due in the autumn, and it represents a chance to change the tone.
Having the confidence to see the return of people like the Duke and Duchess to the UK as a turning of the tide for Britain under Labour could even boost revenues in the long run. After all, using the Laffer Curve theory – which says that revenues can remain the same even as taxes are cut – the government can bring in the same amount of revenue, or more, by encouraging people to stay rather than leave.
There are doubts that a rejig of the so-called non-dom tax regime under both the Conservatives and Mr Starmer is going to work. Officials have been betting that abolishing tax breaks on overseas wealth of the 75,000 tax papers involved would bring in about £33 billion in extra taxes, but experts say a steady drain of these people is undermining the forecasts.
Reinforcing his optimism agenda by having wealth creators onside is a trick that Mr Burnham pulled off as a populist mayor of Manchester. He would be well advised to see a royal return as a chance to make a similar leap away from his predecessors’ failures on the tax front.
