You can see David Cameron edging towards full disclosure of his cabinet’s tax returns while still holding back from a final decision. He says it’s “increasingly likely” and he is “relaxed” about the issue. (Although we report today that many of his colleagues now think it’s inevitable.)
It’s not hard to see why this isn’t straightforward. Labour are goading the prime minister to go ahead in a “you first” kind of way. But what would Cameron gain from full publication of all the cabinet’s tax returns?
The Catch-22 is this. There are many millionaires in the cabinet, as has been reported numerous times. Any reminder of this – during a time of public austerity – is not great for the coalition’s reputation.
If it turns out that several cabinet ministers are set to benefit from the 50p rate cut then it looks bad. If it transpires that certain ministers are not paying the highest income tax rate – despite their huge wealth – that does not look great either. It’s hard to see how the government benefits, beyond looking more credible on its commitment to transparency.
Tax statements only tell part of the story, of course. Here is a full list of cabinet earnings as disclosed to the House of Commons register of interests, which I have pulled together.
What this does not recognise is that many Tory MPs raked in huge amounts of money in opposition – before Cameron banned their external directorships in May 2009, in the midst of the expenses scandal. Lord Strathclyde had six directorships while Andrew Mitchell had seven company directorships.
William Hague earned up to £400,000 from two directorships and other roles while Mr Hammond received a one-off £1.7m dividend from his property company. Francis Maude earned up to £300,000 a year from shares and directorships while Ken Clarke received £230,000 from directorships, speeches and a BBC radio jazz series.
Many ministers also have inherited large amounts of money. So the register of interests recognises current income but not accumulated wealth.
Richard Murphy of Tax Research UK said that publishing tax returns would not reveal the full extent of ministers’ wealth nor whether any tax avoidance is being used.
“A great deal of tax avoidance is not seen on the tax return itself. One of the first objectives of the tax avoider is to make sure their income is not theirs. They move it into a trust, off-shore, and therefore just publishing a tax return will not tell the whole story,” he said.
David Davis, the former shadow home secretary, has expressed reservations about publishing personal tax records and warned it would not create a full picture of MPs’ wealth. He told yesterday’s Telegraph:
“This will induce the politics of envy – but if you are going to do it, you have got to cover everything: wealth, trusts, whether you are a beneficiary of trusts, whether you are going to inherit things.”
Kiran and I have written a wider analysis of this for today’s FT, which you can read (£) here.
Jim Pickard
Kiran Stacey