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The popular British politician has fallen out of favor due to a tax scandal

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The popular British politician has fallen out of favor due to a tax scandal


LONDON – Just two months ago, Rishi Sunak, a popular British fast-growing politician who holds the post of Chancellor of the Exchequer, looked like a good bet to replace the scandal-stricken Prime Minister Boris Johnson.

Now Mr. Sunak’s future is suddenly clouded by a whirlwind of revelations about his wealthy wife’s tax status, as well as the fact that he had a green card that allowed him to live and work in the United States for 19 months after he became chancellor, chief financial officer and second in importance to the UK government.

Even for a country accustomed to political turmoil, Mr. Sunak’s fall has been dizzying.

Mr. Johnson, who himself fought back calls to resign parties held at 10 Downing Street in violation of coronavirus restrictionswas forced to defend Mr. Sunak and refute allegations that his aides planted negative stories about him.

“It’s hard to imagine him making a successful bid for leadership any time soon, or perhaps someday,” said Tim Bale, a professor of politics at Queen Mary, University of London. “Perhaps it also speaks to the invulnerability and rights that affect someone who is so rich.”

Wife of Mr. Sunak, Akshata Murty, the daughter of one of India’s richest businessmen, claims non-profit status in Britain, saving millions of pounds a year in dividend taxes from shares of her father’s technology company Infosys. On Friday, Ms Merty tried to defuse the crisis for her husband by announcing that she would start paying taxes in Britain from her foreign income.

The original arrangement, though common to foreigners temporarily residing in Britain, threw the couple’s extraordinary privileges into focus. At a time when Mr Sunak is raising taxes to cover the public finance deficit linked to the pandemic, his gilded lifestyle has become a political responsibility, making ordinary Britons facing a severe decline in living standards, he is extremely inviolable. .

“People liked Rishi even though he was incredibly rich,” said Jill Ratter, a former Treasury official who is now a researcher at the UK’s Changing Europe think tank. “But being rich and looking like a tax manipulator is another matter.”

Normally balanced politician Mr. Sunak, 41, has been thrown off balance. He first accused critics of unfairly “smearing” his wife. Given that the Chancellor is responsible for setting the UK’s tax policy, Ms Ratter said the issues of Ms Merty’s tax status were both relevant and legitimate.

Next Mr. Sunak argued in interview with The Sun newspaper that “it would be unwise and unfair to ask her to sever ties with her country because she is accidentally married to me.”

“She loves her country,” he said. “As much as I love my own, I have never dreamed of renouncing British citizenship.”

There were two problems with this: Mr. Sunak’s green card actually meant that he declared himself a permanent resident of the United States for tax purposes long after he became a member of parliament. (He renounced the card before his first visit to the United States as chancellor last October.)

Moreover, hundreds of thousands of Indian citizens live in Britain without non-residence status. Mrs. Merty paid £ 30,000 for the classification, or about $ 39,000; According to tax analysts, it could save £ 20 million, or about $ 26 million, by paying taxes on its dividends in low-tax jurisdictions such as India. (She has not confirmed where she pays these taxes.)

“To say she has to be homeless to return home is a farce,” said Richard Murphy, an accountant who advocates for tax justice. He predicted it would repel voters. “Among the many things that are now politically against the Tories,” he said, “it really hurts.”

Opposition leaders called on the government to investigate whether Mr Sunak had violated the ministerial code of conduct. Although Ms Merty has promised to pay British taxes on her income abroad, she will retain unofficial residence status, which will allow her to avoid large inheritance taxes.

On Friday, Mr Johnson insisted Mr Sunak was doing “excellent work”. But relations between them cooled as the furor around the party threatened the prime minister’s work, suggesting that Downing Street was spreading harmful information about him. Mr Sunak distanced himself from Mr Johnson during the previous scandal, and there were feverish speculations that he would step down as prime minister from the Conservative Party.

But Mr. Sunak held back the fire, and events conspired to restore Mr. Johnson’s fate, weakening his opponent’s fate. Russia’s invasion of Ukraine has obscured a scandal with the prime minister, allowing Mr Johnson to speak out about his relationship with President Vladimir Zelensky, whom he visited in Kyiv on Saturday, and to take a tough stance against President Vladimir Putin. Mr. Sunaku had to answer the question why Infosys did not close its office in Moscow. (It’s been done ever since.)

In addition, Mr. Sunak began to identify with economic and tax policies that impose a heavy burden on the British. This is in stark contrast to Mr Sunak’s previous image as a benevolent host who allocates hundreds of billions of pounds in subsidies to protect people from the devastating effects of a pandemic.

“The problem for Rishi Sunak is that these problems come to light when he is also criticized for being like Scrooge,” Ms Rater said. “What does this say about the Chancellor’s sentence?”

The eldest son of Indian immigrants, who studied at an elite Westminster school on a scholarship, Mr Sunak is in many ways a role model for a multinational Britain. After graduating from Oxford, he received his MBA from Stanford, where he met Ms. Merty. He worked at Goldman Sachs and hedge funds before running for a safe seat from the Conservatives in Yorkshire. His father-in-law, Narayana Murti, handed out leaflets to him. When Mr Sunak won, local newspapers called him the “Maharaja of Yorkshire Dales”.

Now they are more inclined to ridicule the royal tastes of Mr. Sunak. In 2020, he painted Japanese women after being photographed with a $ 235 “smart mug” that stores tea or coffee at the exact drinking temperature. Last month, the possibility of photography disappeared when Mr. Sunak did not seem to know how to refuel the car at the gas station.

Under British policy this makes him vulnerable. The same newspapers that once speculated about Mr Sunak as prime minister pending are now questioning whether Mr Johnson will demote him as a result of a reshuffle of the cabinet.

“Rishi Sunak really risks becoming one of those souffle politicians,” said Professor Bale.

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