Premium| Listen to this article |
Rishi Sunak’s wife said she’ll pay U.K. taxes on her global earnings, as the Chancellor of the Exchequer and his family seek to stem a slew of negative headlines that have severely damaged his standing within the ruling Conservatives and the British public.
Akshata Murthy, a millionaire who it was revealed this week holds non-domicile status and hasn’t been paying U.K. tax on overseas earnings, said that while her arrangements are “entirely legal," she will no longer take advantage of the rules allowing her to avoid paying British taxes on income earned abroad.
“I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family," she said in a statement. “I will now pay U.K. tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises. I do this because I want to, not because the rules require me to."
The chancellor and his family are trying to repair the damage to his reputation after a series of stories about his wealthy lifestyle fed into the growing perception that he’s out of touch with the struggles of ordinary Britons.
Rishi Sunak’s Star Fades Just as 10 Downing Street in Reach
Murthy’s statement came soon after Sunak acknowledged holding a U.S. green card while already in his current role as the U.K.’s finance minister. Alongside his wife’s non-dom status, the revelation added to the perception that family isn’t committed to living in Britain for the long-term.
Green Card
Murthy stressed that “India remains the country of my birth, citizenship, parents’ home and place of domicile." But she added: “I love the U.K. too. In my time here I have invested in British businesses and supported British causes. My daughters are British. They are growing up in in the U.K. I am so proud to be here."
Sunak had the green card when he lived and worked in the U.S. prior to entering politics, and he returned it on his first trip to the country as Britain’s Chancellor of the Exchequer in October 2021, his spokeswoman said. Holding a green card grants the owner the status of a permanent resident of the U.S., and means they have to file U.S. tax returns, even when not living there.
In a further sign that the U.K. media’s attention is firmly on the chancellor’s personal affairs, the Independent late Friday reported that trusts in the British Virgin Islands and Cayman Islands, set up to manage Murthy’s interests, listed Sunak as a beneficiary as recently as 2020. The paper cited people familiar with the matter and evidence it has seen. The chancellor’s spokeswoman did not immediately respond to a request for comment.
Speaking before Murthy’s statement and the Independent latest report, Prime Minister Boris Johnson was forced to defend Sunak during a televised press conference on Friday alongside German Chancellor Olaf Scholz aimed at presenting a united front on Ukraine.
Johnson’s Backing
Sunak “has done absolutely everything he was required to do," Johnson said when asked whether the chancellor should have given up the green card sooner. The premier also said he had been unaware of Murthy’s tax status, but reiterated his view that politicians’ families shouldn’t be under scrutiny.
The chancellor’s spokeswoman said Sunak followed all laws and paid full taxes where required for the duration he held the green card. She said he used the green card for travel purposes and he filed U.S. tax returns as a non-resident.
Still, the issue will add to the perception that Sunak’s background and lifestyle is out of touch with that of regular Britons. The major risk for Johnson is that voters view his government’s policies in the same light. The revelations also rekindle the memory of the words of former Tory Prime Minister Theresa May, who in 2016 said: “if you believe you are a citizen of the world, you are a citizen of nowhere."
The opposition Labour Party questioned why Sunak had held the green card for so long -- he became a Member of Parliament in 2015 -- why he ultimately gave it up, and whether he gained any tax advantages during the process.
Tax Scrutiny
“The arrangements revealed this week are not open" to the general public, Labour’s shadow chief secretary to the Treasury Pat McFadden said in a statement, referring to Murthy’s non-domicile tax status, typically used by very wealthy individuals. Sunak’s green card “begs further questions," he said.
Liberal Democrat Leader Ed Davey said the chancellor should resign.
Members of Sunak’s own Conservative Party were already angry at him about the non-domicile saga, with one privately calling his wife’s tax status a disgrace that must be fixed. There’s growing speculation among MPs that Sunak may be removed from his post in a future Cabinet shake-up.
The wave of damaging revelations for Sunak -- who was previously touted as the front-runner to succeed Johnson -- has also seen some of the chancellor’s allies accusing the premier’s staff of briefing against him.
“If there are such briefings, they’re certainly not coming from us in Number 10," Johnson said at the press conference. “Rishi is doing an outstanding job."
Changing Fortunes
Those comments highlight the dramatic change in fortunes for the country’s two most powerful politicians. Johnson himself was just weeks ago -- prior to the war in Ukraine -- battling to save his career over allegations of rule-breaking parties in Downing Street during the pandemic.
The pressure is now on Sunak, who in the early months of his tenure was the country’s most popular Conservative politician. He’s faced intense criticism in recent weeks from politicians of all stripes -- as well as from economists and consumer groups -- for failing to protect ordinary Britons sufficiently from a growing cost of living squeeze.
On Wednesday, a YouGov poll gave him a popularity score of minus 29, with 57% of respondents having an unfavorable opinion of him compared with just 28% who see him in a positive light. Sunak has also tumbled to 29th from 11th in a league table of Tory ministers attending cabinet compiled by the ConservativeHome website.
It’s a table he topped for much of 2020.
Download the App to get 14 days of unlimited access to Mint Premium absolutely free!