Indian businessmen pledge to stop bankrolling Labour if 'non-dom' tax bill passes
London, Sunday 19 July 2009

It was reported in Britain's 'The Observer' newspaper on Sunday 19 July 2009, that Indian-born businessmen Lord Swraj Paul of Marylebone and Sir Gulam Noon of Noon Products would stop donating funds to the Labour Party if the proposed bill to introduce a 'non-domicile' tax is introduced in the UK. The irony is that the proposed £30,000 annual 'non-dom' tax levy is unlikely to make a dent in the multi-million pound fortunes of either man. Sir Gulam Noon is reported to have donated £450,000 to the Labour Party over the past 14 years. Lakshmi Mittal, another 'non dom' Indian business tycoon, who has donated more than £1m, declined to comment.

Lord Swraj Paul pledged to bankroll Gordon Brown's upcoming general election campaign told 'The Observer' that he will stop funding the party rather than give up his non-domicile tax status. Lord Paul, who has funded Labour for more than 20 years, said he will no longer donate because of a government-backed bill that forbids party funding from people who do not pay tax on all income from abroad. Paul, 78, a close friend of the prime minister and his wife, Sarah, said last week that he would not change his tax status so that he can keep on giving. "This is a strange bill before parliament, but I will follow the law. If the law comes in, I won't give money," he said.

The Indian-born tycoon, whose Caparo industrial group has a £700m turnover and 5,000 employees, argued that the party and the country should not turn its back on so-called non-doms - people who are resident in the UK but were born abroad and are therefore "domiciled" abroad for tax purposes.

"The role of 'non-doms' is misunderstood. It should be remembered that I still pay a lot more tax than a lot of other people in the country. The problem is that every case is different. There are non-doms who pay full tax in this country. I fit in that category. So to make a general statement on non-doms is a futile exercise," he said.

'The Observer' newspaper stated that 'the disclosure will come as a crushing blow to Labour, which is already having to plan for a cut-price campaign due to the dire state of the party's finances'. Jack Straw, the justice secretary, has offered government support for a proposed ban on "non-doms" making political donations in a bill that goes before parliament tomorrow. The amendment, tabled by the campaigning peer Lord Campbell-Savours, was designed to force the Tory donor Lord Ashcroft to clarify his tax affairs.

Two other non-domiciled Labour donors also told the Observer they may no longer donate to the party. Sir Gulam Noon, the frozen food tycoon who has been a member for 14 years, has donated more than £450,000. Noon said he would not change his tax status and would therefore stop giving money. He added: "It is very surprising the government is introducing a law like this at a time when they are in dire need of money to win an election."

A second donor, who asked not to be identified but has given more than £250,000, said he would not give up his non-dom status. Another non-dom, Lakshmi Mittal, who has donated more than £1m, declined to comment.

In a further move to clean up politics, the justice secretary will unveil a new constitutional renewal bill tomorrow that will include powers for the Lords to expel peers convicted of criminal offences that carry sentences of a year or more, or who are found guilty of serious misconduct, such as fiddling their expenses.