Rishi Sunak's Nowhere Wife
Or: if you love freeports so much, why don't you marry one?
(Photo credit: Getty)
The latest political scandal out of the UK is too good/bad/mad to be true: Rishi Sunak, the Chancellor of the Exchequer, is married to a fiscal non-dom.
No, not that kind of dom—though she is, jurisdictionally speaking, pretty kinky. Non-doms are people who, all while maintaining a physical presence in the UK, are not considered domiciled there for certain legal purposes, and by extension, not taxed in Britain on their foreign income. They can be in two places at once, and have it both ways, in multiple countries. The jokes are so bad they write themselves!
What this means in practice, though, is that the conservative British politician in charge of his country’s tax policy is married to a woman who does not live in the UK for tax purposes—in spite of physically living in the UK with said British politician who rose to power largely thanks to Brexit, a movement known for its love of closed borders, patriotic slogans and chauvinistic nationalism.
How did this strange form of (non)-belonging come to exist? The legal scholar Kojo Koram points out that the origins of the loophole lie in the late 18th century, “when, to encourage imperialism, the government refused to tax wealth in the colonies unless it was brought to Britain”, ultimately helping the upper classes avoid tax on the wealth they’d accumulated in Empire’s peripheries. In more recent times, the status has been popular among oligarchs and billionaires and the ultrarich: squarely Akshata Murty’s milieu.
Sunak’s representatives have naturally tried to explain away Murty’s status, which allows her to avoid paying taxes on a presumably large chunk of worldwide income. They point out that as an Indian citizen, Murty cannot, by Indian law, hold two citizenships. By that reasoning, it supposedly follows that she can’t be legally domiciled in Britain, either.
The problem with this “disingenuous” explanation is that non-dom status is not conferred automatically when a foreigner moves to the U.K, but only granted after the applicant jumps through a bunch of hoops to demonstrate that they are somehow not fully “in” the country. Like most lucrative loopholes, it costs money (in this case, GBP 30,000 per year!) to remain a non-dom in good standing. You need paperwork, time, lawyers: not something that Polish plumbers or Punjabi shopkeepers can seek out or afford. But if you’re a certain kind of person, it’s worth it, because as a non-dom, you can benefit from even more loopholes in other jurisdictions still. The UK, where you definitely do not live, will in exchange, stay out of your offshore business.
To be perhaps exceedingly fair, many non-domiciled individuals probably do bounce around an awful lot—what else would account for their yacht, their six passports, and their Knightsbridge apartments that sit so empty for so long? But if you’re literally the wife of the guy who runs the Treasury for a conservative nationalist government, “bouncing around” is not a credible excuse. Even Trump appointee Steve Mnuchin couldn’t pull off this level of sleaze, and his wife was practically a modern-day Marie Antoinette.
It’s too easy, though, to complain about politicians’ hypocrisy. So instead, I want to spend a moment on the deep, deep logic at the heart of the Rishi Sunak scandal. You see, for close to a decade now, Rishi Sunak has been one of the world’s greatest supporters of freeports, or places that, like his wife, are legally neither here nor there. Freeports, as I have written previously, are warehouses, industrial zones, and storage areas on a country’s physical territory, but outside its fiscal or regulatory boundaries. They are the deregulated industrial equivalent of the human non-dom.
Rishi’s love affair with freeports began when he was a young MP. In 2016, he published a white paper with a UK think tank entitled “The Freeports Opportunity”. In short, the report claimed that once Britain freed itself from the regulatory shackles of the European Union, it could establish customs-free, low-tax zones and in the process, create tens of thousands of jobs in economically distressed areas, because business loves a loophole.
Fast forward a few years: Sunak’s been appointed Chancellor, and though there’s been a lot of criticism of the purported benefits of freeports overall, the government has indeed opened a handful of them around the country. It remains to be seen what kind of an impact they will have, but Koram is once again a useful guide to understanding what informs these kinds of ideas. In his new book, Uncommon Wealth, Koram argues that policies that imperialists tested out abroad years ago are “boomeranging” back to the center, often with the effect of impoverishing ordinary people and serving billionaires and big business.
Freeports working around national regulations are one example of that; non-doms avoiding taxes are another. So let’s give ideological credit where it’s due: there is, alongside the glaring double standards, an admirable consistency with which Sunak conducts his personal and political affairs.