LONDON: Most of Britain seems to have launched an all-out attack on a common enemy. No, it’s not Vladimir Putin in Moscow, it is Britain’s own Chancellor of the Exchequer Rishi Sunak and his wife Akshata Murthy.
Akshata Murthy, daughter of Infosys co-founder Narayana Murthy is under fire for doing no more than following the law. The real aim is to get Rishi Sunak, seen by many until this attack as the prime minister in waiting. That wait could not be longer than his supporters expected, and there may now be nothing to wait for.
The law provides for a non-domicile status for outsiders to the UK to settle in Britain but without having to pay tax in Britain on their earnings outside. The law is a principal facilitator of the fundamental British policy to live off the wealth of the world. Britain earns from the fee from the non-domiciled, the non-doms as they are called. Britain earns from them additionally because they spend substantially within Britain and often go on to invest.
The law makes room for people with roots outside or plans eventually to settle outside. Former Chancellor George Osborne ended a permanent non-dom status. Under the amendment he introduced, those born to UK-domiciled parents or in the country for 15 of the last 20 years must pay full tax. Following that many non-doms left in self-imposed exile for five years to return for up to another 15-year spell.
Akshata Murthy, who has retained her Indian citizenship, is not covered by that amendment. As a non-dom, she is therefore reported to have saved close to three million dollars last year in earning about 15 million dollars in dividends off shares worth close to a billion dollars in Infosys. The outcry now is why she saved on paying a sum nearing three million dollars in tax in Britain.
Akshata Murthy followed a law that was enacted for people like her, way back in 1799. And now the charge against her is that someone like her should not be following that law. Her right in law was leaked to the media as an aberration, that the media rapidly spun into a scandal.
Yes Prime Minister
The cloak and dagger plotting comes straight out of Yes Minister, or, Yes Prime Minister. Sunak has long been more popular than Prime Minister Boris Johnson and has been spoken of widely as his replacement. Now after this, less widely.
The British have long held a visceral dislike for outsiders with a lot of money, some of which could have come their way—even if their government invites such money in by policy enacted into law. And if Akshata is richer than the Queen, an unlikely claim that some tabloids have been publishing more hysterically than accurately, the British are not likely to love her for it.
Only a very few at the very top could have leaked her personal tax information to the media. Prime Minister Boris Johnson says he works closely with Sunak, and that family members of people in public places should be kept out “as far as possible.” Sunak has now ordered an inquiry, that will no doubt clear him. But this is a big blow to any hopes he has of becoming PM. This is no longer about facts and fairness, it is about perceptions and prejudices.
In the face of the media and political salvo aimed at her, Akshata’s damage control move could have been yet more damaging. She says she will now pay tax in the UK on her dividends after all because she does not want this to become a distraction for Rishi Sunak, and because she now thinks she has “offended against a British sense of fair play.” Now, this is being used against her, the opposition Labour is taking this as an admission that she had done something wrong even if right in law. And she would not have done so if the media had not exposed her.
Akshata Murty has since moved out of the Chancellor’s official residence at 11 Downing Street, right next to the Prime Minister’s house, to move into her Central London home. Sunak has said he is not quitting. The campaigners against the Indian couple show no sign of quitting either.
— London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.