By Dipankar De Sarkar

London, July 19 (IANS): Indian-born steel tycoon Lord Swraj Paul, a high-profile supporter of Labour, says he will stop bankrolling Britain's ruling party if he is forced to give up his non-domicile tax status under a proposed legislation.

Billionaire Paul, founder and chairman of the Caparo Group of industries, is a long-standing Labour backer, and had promised to bankroll the cash-starved party at the coming general elections due by June 3, 2010.

But the 78-year-old Punjabi, who was made Deputy Speaker of the House of Lords by Prime Minister Gordon Brown last year, issued a stark warning ahead of a debate in parliament Monday over a bill that would stop political funding from so-called 'non-doms'.

"This is a strange bill before parliament, but I will follow the law. If the law comes in, I won't give money," Paul said in comments published in The Observer newspaper Sunday.

With the bill having been promised government support by Justice Secretary Jack Straw, Paul's opposition was echoed by another well-known Indian-born Labour backer, Sir Ghulam Noon.

Noon, known as the Curry King of Britain for his vast frozen food and catering empire, said: "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," adding he too would stop giving money to Labour if the bill goes through parliament Monday.

Britons who have non-domicile status do not pay tax on all income from abroad, but these non-doms have also been important funders of all three major parties in Britain - Labour, Conservative and, to a lesser extent, the Liberal Democrats.

The opposition Conservative Party, which leads Labour in a string of opinion polls and is a strong bidder in the runup to the 2010 elections, targeted the issue of 'non-dom' donations within months of Brown becoming prime minister in June 2007.

Political observers say raising the issue suits the Conservative party for two reasons: first, Labour is thought to be more dependent on non-dom funding than the Conservatives.

Second, it gives the party in opposition the public support generally associated with raising an 'ethical issue'.

However, in a strange twist, it is actually a Labour member of the House of Lords who has proposed the bill that will be debated Monday.

The bill by Lord Dale Campbell-Savours, a campaigning Labour politicians, was originally designed to seek clarifications on the tax status of Conservative party Deputy Chairman, Lord Michael Ashcroft.

Ashcroft holds British and Belizean nationality and is accused by Labour of bankrolling Conservative candidates in marginal constituencies of his choosing - a charge he denies.

The Labour government had opposed the bill but withdrew plans to issue a three-line whip, apparently because of backbench pressure from its MPs, according to the Labour-supporting newspaper The Guardian.

Swraj Paul, who will continue to lend moral support to Labour and Gordon Brown, said 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.

A third important Indian-origin 'non-dom' donor to the Labour party is Lakshmi Mittal, the world's eighth richest man who has reportedly donated a million pounds to Labour over the years.