UK's Rishi Sunak makes move to defuse career-threatening tax row

Britain: Rishi Sunak asked for a formal review into whether he properly declared his financial interests, as the UK Chancellor of the Exchequer tries to defuse a row over his tax affairs that threatens to derail his career.

In a letter to Prime Minister Boris Johnson published late Sunday, Mr Sunak said he wants a probe by the government's adviser on ministerial standards to help ensure the public "retain confidence in the answers they are given."

The move comes as he faces intense pressure to lay out the details of his and his family's financial arrangements. It emerged last week his millionaire wife, Akshata Murthy, holds non-domicile status and was not paying UK taxes on her overseas income and the chancellor held a US green card -- proof of permanent residency -- which he only gave up more than a year and a half into his current role.

The opposition Labour Party said it wrote to Johnson and the standards adviser earlier Sunday demanding a probe into whether ministerial rules had been broken. "A fish rots from the head, Labour's deputy leader Angela Rayner said in an emailed statement. "It is the prime minister's responsibility to bring this debacle to a close by ensuring that standards are upheld across his cabinet."

The furore compounds the problems facing Sunak, whose popularity has slumped since he was accused of not doing enough to help Britons facing a record slump in living standards. In a mini-budget last month, he went ahead with a levy increase to fund health care and rejected calls to boost welfare payments.

Taxing Times

The country's tax burden now at its highest level since the 1950s, so the backlash when it was revealed Murthy holds so-called non-domicile status -- allowing her to not pay British tax on overseas income -- was inevitable.

Though she said late Friday she would no longer take advantage of that rule and would now pay UK taxes on her foreign earnings, it is unlikely the scrutiny will fade. Together with the revelation about Sunak's green card, the reports have fueled the perception the family is not committed to Britain.

By requesting an inquiry, Mr Sunak wants the findings to help draw a line under the issue. But it also carries the risk of keeping the focus on his financial arrangements. Labour is asking if the chancellor has taken advantage of tax havens and demanding "full transparency" on where the family pays taxes.

"I have always followed the rules and I hope such a review will provide further clarity," Mr Sunak said on Twitter where he posted the letter to Johnson.

'Outstanding Job'

PM Johnson has so far defended Mr Sunak, telling reporters on Friday the chancellor is doing an "outstanding job" -- though he also said he had not been aware of Ms Murthy's tax status.

The fallout illustrates the dramatic turnaround in their fortunes. Just weeks ago Johnson was clinging to power, with members of his Conservative Party threatening to oust him over allegations of rule-breaking parties during the pandemic. At the time, Mr Sunak was seen as Johnson's most likely successor.

That was before Russia's invasion of Ukraine. Since then, Johnson's personal approval ratings have recovered and several Tory MPs have said an international crisis is not the time for a leadership change.

Now the question is whether PM Johnson keeps Mr Sunak in the role, as some Tories speculate about a change in chancellor during a ministerial shuffle in the coming months.

Different Views

The country's two most powerful politicians have very different economic approaches, with Johnson more inclined toward spending on big infrastructure projects and the chancellor -- the tax rises on his watch not withstanding -- styling himself as a low-tax, fiscal conservative.

Mr Sunak's slumping popularity helps solidify Johnson's position by removing an obvious challenger, but it also carries big risks. The reports about the chancellor's wealth and his family's tax affairs play into Labour's regular attack on the Tories, that "it is one rule for them and another for the rest of us."

Local elections in London and across much of the UK on May 5, therefore, loom large for PM Johnson, Mr Sunak and the Tories -- especially if the cost-of-living crisis hits support for the party.

Today I have written to the Prime Minister asking him to refer my ministerial declarations to the Independent Advisor on Ministers' Interests.

"I have always followed the rules and I hope such a review will provide further clarity," he tweeted.