Taxing the ex-pats

British citizens abroad enjoy all the privileges of their citizenship without making a contribution to their mother country. It’s time to fix that, says Max Wind-Cowie.

‘Remember that you are an Englishman, and have consequently won first prize in the lottery of life.’ So said Cecil Rhodes, a controversial man and – for much of his life – a sort of ex-patriot. Cecil was an adventurer, a colonist and a buccaneer. He founded Rhodesia and lived out his twilight years in modern South Africa but never, in his relatively short life, did Rhodes abandon the idea of himself as first and foremost a subject of the British crown.

Of course, in the 1890s, it was perhaps a little easier to see the direct benefits of British citizenship. Much of the globe was coloured pink with our imperial stamp, this country was amongst the richest in the world and was on almost any measure the most powerful. A British passport guaranteed not simply the safety of its carrier but also the respect and obedience of foreigners. It was not simply a piece of paper, it was a marker of civilisation and of authority.

But to be born an Englishman (or, for now at least, a Scots or Welsh man) is still to have got lucky. We remain a stable, wealthy and influential country. Whilst we no longer rule vast swathes of the planet, our culture and our language are now valid currency across the world. A British passport still buys the individual carrying it the weight and might of the British state in their time of need – we are never alone when we are carrying it, we are in the company of a great and still-powerful nation.

An increasing number of British people take advantage of our smaller, more open world in order to enjoy the benefits of a life abroad. Around 150,000 people a year leave these shores for a life in another country – down from 200,000 a year back in the early Noughties but still a great many people. Altogether, the total number of British citizens living elsewhere is thought to be upwards of 5 million – although a precise figure is almost impossible to come by, the UK’s data on Brits abroad being almost as sketchy as it’s data on foreigners living here.

The majority of people moving abroad for a year or more are of working age, off for an adventure and for a career, but a significant minority are retirees seeking sunnier climes in which to enjoy their pensions. It is not my intention here to criticise those who have left. The British character has always had within it a streak of adventurism, sometimes for better and sometimes for worse. But with as much as a tenth of our citizens choosing to live and work abroad – whilst still holding their British passport and still benefiting from all the privileges that it brings – there is surely a question of what obligations we might expect them to fulfill as we at home continue in our commitment to them?

Expatriates can still vote in UK elections. They still enjoy the security guaranteed by their belonging to Britain. Many of them receive money from the state, in the form of a pension or child benefit to support their children and – should they choose to return even temporarily – free healthcare courtesy of the NHS (often even when, technically, they might not be entitled to it).

And before moving away, the overwhelming majority of expatriates will have been taught for free in British schools, cared for without charge by GPs and dentists, received subsidised degrees in UK universities and – more abstractly – benefited from our mutually funded infrastructure, policing, defence and public health programmes. Of course the sort of person who takes the leap into the unknown is likely to see themselves as rugged, self-made and independent. That is natural and is, to some extent, to be applauded. But we ought to be able to remind them, gently, that is part self-mythologising.

As President Obama once controversially, but correctly, reminded America’s entrepreneurs (another breed given to telling half-true stories about themselves)

Look, if you’ve been successful, you didn’t get there on your own… Somebody helped to create this unbelievable system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen.

True for self-made tycoons. True for British expatriates. The community of Britain has helped to shape individuals capable, healthy, clever and brave enough to go out into the world and make a life for themselves. We deserve some recognition and reward for that investment.

If that is a little too transactional for your taste, then consider this. A British citizen always has a home to return to here in the UK. There is an unbreakable emotional bond between a nation and its citizens – one of mutual obligation, care and special privilege. We are an emotional safety net as well as a practical one. Out on a limb, in a foreign land, we are always here – with open arms – should the adventure go awry. As your new national home collapses around you there is an option available to you that is not available to your new neighbours – no matter how in need they may be.

So how might we recognise these obligations without putting restless Brits off exploring the world and living where they choose? As I say, it is not my intention to criticise or condemn expatriates – who knows, perhaps one day I might become one myself. But I do think there is at present an unhelpful and unfair imbalance – Britain rightly meets a great many obligations to our prodigal sons and daughters, but we ask too little in return.

Some countries already seek to bring some balance to bear in this conundrum. The United States asks its citizens living overseas to file tax returns in the US as well as in their adopted country – in exchange for their continued membership of the US’ political community. Whilst they are generally exempt from actually paying any tax on their first $100,000 or so in income, US citizens nonetheless are obliged to file a return or risk huge fines.

They can, of course, choose to renounce their status as an American citizen and thereby exempt themselves. But there’s no going back. Few Americans actually end up paying tax on foreign income, as there are a myriad allowances that reduce one’s bill. But most have to pay for help producing their return and the very act of filing serves as an annual reminder of their continued relationship with, and obligations to, their mother country.

I don’t propose to force Brits living abroad to file a whole separate tax return. The added bureaucracy and the implicit incentive to hide earnings would be counter-productive. But the notion of a regular engagement with one’s home country – and the mutual recognition of shared interests and responsibilities – is healthy. It reminds folk of the commitment that we have to them and of the obligations they, therefore, owe to us.

Instead, then, I propose the following, simpler solution. Any British person living abroad who wishes to retain their passport and their citizenship should be asked to pay a flat, annual fee of £500 to the British Exchequer. There would be exemptions – of course – for those who are students or have very low incomes or are performing voluntary work for example. But for most expatriates this annual charge would be an expectation in return for the continued protections of British citizenship and in recognition of the investment this country has made in their past and in their future.

Not only would this help to remind expatriates of their continued membership of our political community, it would have the not unpleasant side effect of raising money too. If only half of our current expatriates ended up paying the ‘passport levy’ then the UK would benefit to the tune of one and a quarter billion a year. Not an amount to be sniffed at in these straitened times. In return, perhaps we could further solidify our relationship with Brits abroad by imitating the French and granting them an MP of their own – someone elected by expatriates to represent their interests in the House of Commons. After all, there should be no special taxation without special representation.

Cecil Rhodes’ greatest political aspiration was to unite the British Empire into a single political structure – with MPs representing the colonies in Westminster and these territories as nations in the United Kingdom rather than as dominions under the British state. He recognised that the notion of a transnational community would not be sustainable in the long-term if it was not accompanied by shared obligations, responsibilities and governance.

It was a pipe dream and it never came to pass. But we can – and should – try harder to ensure that British citizens feel bound into our political and national life. To be born an Englishman is still to have won life’s lottery; it is time to ask Englishmen abroad to fork out for their ticket.