Labour Party vows to scrap non-domicile tax status held by chancellor Sunak's wife

Chancellor of the Exchequer Rishi Sunak's wife Akshata Murthy enjoys the status recently said she'd begin paying taxes in the UK on all her income. PHOTO: AFP

LONDON (BLOOMERG) - A British Labour Party government would scrap a status that allows wealthy foreigners to live in Britain without paying British taxes on their overseas earnings, Shadow Chancellor Rachel Reeves said.

"We're in the middle of a cost-of-living crisis at the moment and the Conservatives are increasing taxes for working people," Ms Reeves told BBC radio on Monday (April 25).

"The government should do much more to crack down on some of the loopholes which mean some of the wealthiest in our society aren't paying their fair share of tax."

With a general election due in about two years' time, Labour is beginning to flesh out its economic policy, and the plan to scrap the centuries-old tax arrangement is part of that.

The so-called non-dom status allows people whose fathers were born overseas to avoid paying taxes on international earnings while living in Britain for as long as 15 years.

Labour is also taking a swipe at Chancellor of the Exchequer Rishi Sunak, whose millionaire wife Akshata Murthy enjoys the status, although she recently said she would begin paying taxes in Britain on all her income, following a backlash in the press.

"If you make Britain your home you should be paying your taxes here, which is why we would abolish the non-dom status to ensure that that actually happens," Ms Reeves said.

She said the policy would bring Britain in line with France, Canada and Japan that allow for "temporary" respite from domestic taxes for foreigners present in their countries for as long as five years.

Ms Reeves said Labour would consult on the time period. Scrapping non-dom status could earn the Treasury up to US$1.3 billion (S$1.8 billion) a year in extra taxes, she said.

The furor over Ms Murthy's tax status has contributed to a precipitous fall in Mr Sunak's popularity.

On Monday, he placed last, on a negative rating for the first time, in a regular league table of Tory ministers attending Cabinet compiled from a survey of party members by the influential ConservativeHome website.

The chancellor - who topped the ranking for much of 2020 - now has a satisfaction rating of minus 5.2.

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