Taxing non-doms will not help the economy, the chancellor has claimed – amid estimates changing the rules could raise £1 billion a year for the Treasury.
Jeremy Hunt said he would rather the super rich “stayed here and spent their money here” after he was questioned over why he did not change the rules.
Mr Hunt argued that scrapping the tax loophole, a policy Labour has suggested, would "damage the long-term attractiveness of the UK".
Under non-dom rules people who actually live in the UK can officially "domicile" themselves abroad in exchange for a fee. The tax status allows the very wealthy to avoid paying vast amounts of tax.
The tax rule hit the headlines earlier this year after The Independent revealed that Rishi Sunak's multi-millionaire wife Akshata Murty held the status.
Mr Sunak called the reports about his wife "unpleasant smears" at the time, though she ultimately gave up the advantage.
It is unclear exactly how much money abolishing non-dom status would raise every year, but most estimates put the figure in the billions.
Labour has cited researched from the EU Tax Observatory suggesting £1bn boost to the exchequer, while other research from the London School of Economics has put the number closed to £3.2 billion.
Shadow chancellor Rachel Reeves said in the Commons on Thursday that Mr Hunt was endorsing "tax free income for millionaires while millions face frozen tax allowances and council tax hikes".
In an apparent reference to Mr Sunak's household, she added: "How can he possibly claim that this is fair? He refuses to act, and I wonder why. Maybe that was the only policy that he can't get signed off by No 10 Downing Street. I say if you make Britain your home you should pay your taxes here."
Mr Hunt was on Friday quizzed further on why he passed up on the policy given he is planning to make deep cuts to public services and raise taxes on people on regular incomes.
The chancellor said Treasury officials did not give him solid numbers on how much abolishing or paring back non-dom status would raise.
“They said to me that they were very unsure about the figures that were being bandied around, as far as the savings were concerned," he said.
“Like me they wanted to be very sure they weren’t doing things that damaged the UK’s attractiveness. These are foreigners who could live easily in Ireland, France, Portugal, Spain, they all have these schemes. All things being equal, I would rather they stayed here and spent their money here.”
Pushed whether the Treasury gave him a figure on how much abolishing the status would bring in, he said: “No, because we don’t agree with the figures that Labour have given.
“The Treasury did not tell me it was going to help the economy to do this, that’s why I chose not to do it.
“I’m not going to do anything that’s going to damage the long-term attractiveness of the UK, even though it gives easy shots to opposition parties, I think it would be the wrong thing to do in terms of creating jobs in the UK.”
In April Labour said it would abolish the non-dom tax status and replace it with a system similar to that of Germany or Canada – which allow temporary residents to avoid paying domestic tax on overseas earnings.
