By Dipankar De Sarkar

London, March 2 (IANS) Indian-born steel magnate and Labour Party supporter Lord Swraj Paul has found himself dragged into a controversy on who is allowed to fund political parties in Britain after a leading opposition contributor and strategist admitted his tax status is that of a non-domicile.

Lord Michael Ashcroft, who is estimated to be worth some one billion pounds and is vice chairman of the opposition Conservative Party, declared on his website Monday: "My precise tax status� is that of a 'non-dom' - a status that allows the taxpayer to avoid paying taxes in Britain.

"Two of Labour's biggest donors - Lord Paul (recently made a privy councillor by the prime minister) and Sir Ronald Cohen, both long-term residents of the UK, are also 'non-doms'," added Ashcroft, who used to live in Belize.

Alongside, Conservative leader David Cameron claimed Ashcroft's status "happens to be the same as Lord Paul, one of Labour's biggest donors, someone whom the prime minister made a privy councillor."

But the Caparo Group chairman dismissed the comparison, saying: "It is really ridiculous for anybody to start comparing me to anybody. My view has been simple - I am one of the most open people (about the fact) that I am non-dom. That's what the law allows me and that's what I am.

"I have never hidden the fact or said it was my own private affair. I don't know why they are using my name, except to cover themselves up."

While Paul, a close friend of British Prime Minister Gordon Brown, has given 69,000 pounds to Labour - including 45,000 pounds to Brown's 2007 party leadership campaign - Ashcroft has given the Conservatives 4.5 million pounds.

Former Labour minister Denis McShane said: "The Tory propagandist Iain Dale is tweeting frantically about Swraj Paul, a Labour donor and Indian steel magnate with business operations across the globe.

"Unlike Lord Ashcroft - who is a vice-chairman of the Conservative Party, has an office and staff at the Tory HQ, and masterminds the Tory strategy to win key marginals with a massive targeted spend - Lord Paul has no party or policy role."

However, the Conservatives, bidding to topple Labour in general elections due by June 3, are asking questions about Brown's 2009 appointment of Paul to the privy council - a position they say is meant for people who are involved in affairs of State or have close relationship with the Crown.

The opposition party pointed out that Paul does not attend cabinet meetings and the highest position he has held in public life is one of 18 deputy speakers of the House of Lords, the upper chamber of parliament.

Paul clarified that his contributions were made by the Caparo Group rather than by him personally, and that he pays the bulk of his taxes in Britain.

"This law was not made for me or Lord Ashcroft. It's been going on for the last couple of hundred years. The day they change it I will have to abide by the new laws. Until then it gives me the option," he told BBC radio.

"The law allows a non-dom to be a member of the House of Lords. It's not as if I just steamrolled myself into it. Don't forget that I was appointed by the Conservative Party, not Labour. They are spreading this canard that I was appointed by the Labour Party."