Ed Miliband has vowed to abolish the "non-domicile" rule that allows wealthy people to avoid UK tax.
The Labour leader says the 200-year-old rule, which applies to around 116,000 people, "can no longer be justified" because it makes Britain an "offshore tax haven for the few".
But Ed Balls warned in January that scrapping the "non-dom" rule would force people to leave the country. Skip to 6:38.
The shadow chancellor said: "If you abolish the whole status, it will probably end up costing Britain money because some people will leave the country."
BuzzFeed News understands that Miliband's office has been discussing scrapping the rule for several months. It is unclear whether Balls was kept in the loop.
Balls has since changed his tune, it seems.
He's really opposing this? RT @BBCNormanS Chancellor warns scrapping "non dom" tax status cd cost 00s of millions in jobs and investment
Chancellor George Osborne said: “This is a complete shambles from Ed Miliband.
"He has announced a policy on non-doms that has already completely unravelled. Ed Balls has admitted that abolishing non-dom status will cost Britain money; when you look at the small print of Labour's policy, it turns out that the headline is completely misleading and the majority of non-doms are not affected at all."
Balls issued a statement on his blog to deny any contradiction between his comments and Labour's policy.
He pointed to the end of the interview where he said: “I think we can be tougher and we should be and we will”. He wrote:
That is exactly what we have proposed: ending a situation where people permanently living in the UK year after year can claim non-domicile status to reduce their tax bills and play by different rules to everyone else.
Under our plans, no-one living here in the UK will be able to shelter worldwide income from tax because their father was born abroad or they buy an overseas grave plot. But our plans, which we were working on in January, do allow for temporary residence for people genuinely here for a temporary period, for example people who are here for two or three years at university.
Not to have a short-term option would mean students or business visitors being deterred from coming to our country. As a result, independent experts have said that the changes we are proposing today - abolishing non-dom status while allowing for genuine temporary residence - will raise revenue.