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Tax exile donations to face cap Tax exile party donations capped
(about 16 hours later)
MPs have voted through plans designed to limit donations to political parties by tax exiles to £7,500 a year. Tory donor Lord Ashcroft is facing fresh pressure to declare whether he pays taxes in the UK after the Commons passed new party funding rules.
The government had said the idea was unworkable when it was defeated in the Lords on the issue last month but has now agreed to bring it in. The move, which was nodded through by MPs without a vote, will cap donations from non-UK tax payers at £7,500.
Labour's Lord Campbell-Savours, who led the campaign in the Lords, was aiming it at the Tories' biggest donor Lord Ashcroft, whose tax status is unclear. It will not directly bar Lord Ashcroft's gifts to the Tories, which are made through a UK-based firm.
The Tories said it was a sign the government could not control its MPs. But Labour critics believe it will be difficult for him to keep funding the party unless he pays taxes in the UK.
On Monday MPs agreed the amendment without a vote which will effectively ban gifts of more than £7,500 from people who do not pay UK taxes. Lord Ashcroft was made a Conservative peer in 2000 after giving an assurance that he would pay UK taxes, but has since refused to discuss his tax affairs saying that they are private.
Marginal seats Tory leader David Cameron and other senior Conservatives have also refused to comment.
At the time of the Lords vote, the government argued it could be hard to enforce residence-based restrictions as the authorities did not have full details of taxpayers' domicile status. 'Buying votes'
But Justice Secretary Jack Straw appears to have changed his mind after a meeting with Labour MPs and peers last week and replaced the Lords amendment with his own, similar measures. The peer, who is the Tories' deputy chairman, has been pouring cash into key marginal constituencies in an effort to boost Tory candidates' chances at the next election.
He told MPs it would take "some time" to ensure that regulations were brought in and guidance was established so they were "workable". The money is used for mail shots, phone canvassing and other marketing efforts.
"Overall, I think that it is possible to make the sentiment behind these amendments in the other place workable. That's what we've sought to do," he said.
Many Labour MPs are unhappy about the position of Lord Ashcroft - the Conservatives' deputy chairman - who was partly brought up in Belize and has close business ties with the former British colony.
What actually we see here are the dying embers of a rudderless government that, once again, has failed to be able to control its backbenchers Jonathan DjanoglyConservativesWhat actually we see here are the dying embers of a rudderless government that, once again, has failed to be able to control its backbenchers Jonathan DjanoglyConservatives
He is one of the party's main donors and is helping fund its efforts to win marginal seats at the next election. Labour MPs have accused the Tories of trying to "buy" votes - but the Tories say the payments simply levels the playing field with incumbent Labour MPs, who get a Parliamentary allowance to communicate with their constituents.
The Conservatives have always insisted his donations are legal under electoral law requiring donors to be registered to vote in the UK and for companies making donations to be registered at Companies House. Labour has long suspected Lord Ashcroft is domiciled for tax purposes in Belize, where he has extensive business interests.
But Lord Ashcroft has not confirmed whether he is resident in the UK or pays taxes in the country. But the Tories insist Lord Ashcroft's donations are legal under electoral law requiring donors to be registered to vote in the UK and for companies making donations to be registered at Companies House.
The Political Parties, Elections and Referendums Act 2000 requires that donors to UK political parties should be on the electoral register or companies trading in the UK. But it makes no restriction on their tax status. Lord Aschroft's donations are made via his British-based company Bearwood Corporate Services.
Under the changes, donors would also have to be "resident, ordinarily resident and domiciled" in the UK in the previous tax year. The Political Parties, Elections and Referendums Act 2000 makes no restriction on donors' tax status.
Consensus But Monday evening's amendment to the Political Parties and Elections Bill, which is aimed at cleaning up politics in the wake of the expenses scandal, will effectively ban gifts of more than £7,500 from individuals who do not pay UK taxes.
But Mr Straw said the change would only be implemented after discussion with other parties and the Electoral Commission, because "further steps" would be required to link donations to tax status. It would not directly ban Lord Ashcroft's donations, but Labour MPs believe it will put pressure on him to clarify his tax position.
Monday's amendment would not directly ban Lord Ashcroft's donations, made via his British-based company, Bearwood Corporate Services. 'U-turn'
But Labour MPs believe it will put pressure on him to clarify his tax position. Under the changes, donors would have to be "resident, ordinarily resident and domiciled" in the UK in the previous tax year.
The amendment was tabled in the House of Lords by the veteran Labour peer, Lord Campbell-Savours, who has been campaigning against tax exile donations.
Justice Secretary Jack Straw had originally planned to overturn the measure when the Bill returned to the Commons, on the grounds that it would be unworkable.
People who go abroad for tax purposes should not be interfering in our elections Martin LintonLabour MPPeople who go abroad for tax purposes should not be interfering in our elections Martin LintonLabour MP
However, he shifted his position after a meeting with Labour MPs and peers last week, and instead tabled a series of minor technical amendments to assist implementation.
The changes were waved through by MPs after the Tories indicated they would not vote against them.
Mr Straw told MPs it would take "some time" to ensure that regulations were brought in and guidance was established so they were "workable".
"Overall, I think that it is possible to make the sentiment behind these amendments in the other place workable. That's what we've sought to do," he said.
But Mr Straw said the change would only be implemented after discussion with other parties and the Electoral Commission, because "further steps" would be required to link donations to tax status.
The changes were nodded through after the Tories indicated they would not vote against them.The changes were nodded through after the Tories indicated they would not vote against them.
But Conservative spokesman Jonathan Djanogly said the bill had been built on cross-party consensus adding: "I'm afraid that is now looking no longer to be the case." But Shadow Solicitor General Jonathan Djanogly said they had shattered the cross-party consensus on the Political Parties and Elections Bill, which is being rushed through Parliament in response to the expenses scandal.
He said the government had opposed the amendment in the Lords because it was "unrealistic" and "cannot work" and should explain "why this u-turn came about". He said the government had opposed the amendment in the Lords because it was "unrealistic" but now backed it - and he urged ministers to explain "why this u-turn came about".
"What actually we see here are the dying embers of a rudderless government that, once again, has failed to be able to control its backbenchers," he said."What actually we see here are the dying embers of a rudderless government that, once again, has failed to be able to control its backbenchers," he said.
Labour backbencher Martin Linton said stopping such donations was part of cleaning up politics.Labour backbencher Martin Linton said stopping such donations was part of cleaning up politics.
"People who go abroad for tax purposes should not be interfering in our elections," he said."People who go abroad for tax purposes should not be interfering in our elections," he said.
"If they don't pay our taxes, why should they have any right in determining what those taxes are?""If they don't pay our taxes, why should they have any right in determining what those taxes are?"