Labour Tax Rise Set to Lose Money as Millionaires Flee Britain
Treasury officials are warning that a Labour tax rise on ‘non-doms’, far from raising more cash, will actually cost money instead. The Government is on a very steep learning curve that punishing taxes don’t work, says Matthew Lynn in the Telegraph.
It was going to pay for universal breakfast clubs in schools, for better hospitals, and more dental treatment on the NHS.
In the run-up to the election campaign, we heard a great deal from the Labour Party about all the extra services that would be paid for with its clampdown on “non-doms”, the small group of wealthy foreigners who pay less tax than the rest of us.
And yet, we have now learnt that Treasury officials are warning that the extra tax, far from raising more cash, will actually cost money instead. In reality, the Government is on a very steep learning curve, and it is about to discover that class war, and punishing taxes, don’t work.
Its non-dom policy may appear a small tweak, but it’s turning into a catastrophe for the British economy – and one that will leave us all worse off.
It would be hard to think of a more spectacular own-goal, so early into the life of a new Government. A clampdown on non-doms was a centrepiece of Labour’s campaign for power, with every shadow minister promising an endless series of freebies that would be seemingly paid for with extra taxes on U.K. residents whose permanent homes are overseas.
The former chancellor Jeremy Hunt was nudged into tougher non-dom rules, at which point Rachel Reeves immediately doubled down, pledging even higher taxes on foreigners who choose to live and work in Britain. One way or another, she was determined to get her hands on their money.
And yet, according to reports this week, officials are already warning that it will not work out as planned. The Office for Budget Responsibility (OBR) originally forecast that scrapping the tax break for wealthy foreigners could raise about £3.2bn a year, although the fiscal watchdog also warned that figure was “highly uncertain”.
It now appears likely that the OBR will update its predictions to say that the clampdown might actually cost £1bn or more in lost revenues.
Well, gosh. That’s a surprise. It turns out that wealthy Indians, Chinese or Americans don’t actually want to pay higher taxes in the U.K. We have plenty of anecdotal evidence from accountants and lawyers that they are already moving elsewhere. After all, by definition these are some of the most mobile people in the world.
Worth reading in full.
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Surprise, surprise!
Yes but, these people don’t care.
They don’t care because they personally won’t feel it.
They don’t care about the damage they will cause by:
* net zero
* woke ism
* public school vat
* winter fuel
* non dom tax
* lammy being a complete twit
* Grangemouth closing
* port Talbot closing
* all dissent rendered illegal
Because they, even more than the abysmal tories, are totally insulated from reality.
At least the tories had a cadre of shire MPs willing and able to stand up for the common law.
The problem with labour is they lack even that.
The taxes don’t need to “work”. That’s not intention.
Exactly. Socialism is all about process not outcome The process must be right, in line with the correct Party principles Comrade, even if the outcome is worse.
The outcome is that those in charge stay rich and powerful and get to tell other people what to do
On a smaller scale, at least Labour realised that the Green’s punitive car-park charges in Brighton lost more money than it gained, and that is just on the council’s balance sheet, without regard to the traders’ finances.
Even the most basic Business Management course gives idealised examples of the relationship between price and revenue. If you charge zero for a banana, you get millions of customers but have negative profits. If you charge a million pounds for one banana you get no customers (other than possibly a millionaire art collector) and still have negative profits.. Somewhere between the two is the “sweet point” which theoretically maximizes your profit in the absence of government price manipulation. Every schoolchild is taught that x times (1-x) has a maximum value of ¼. Every market trader understands this, even to the point of discounting the price of fruit in the afternoon, but Labour doesn’t grasp it, or rejects it on ideological grounds.
If Socialists understood economics, they wouldn’t be Socialists.
“If you charge zero for a banana, you get millions of customers but have negative profits.”
This is the principle Ed Minibrain is using to bring down energy bills. Lots more windmills producing free electricity because wind is free innit.
A Laffer a minute with this bunch of economic cretins (although Lammy is a cretin in ALL matters, not just economic)
The Laugher Curve – the trajectory of the members of the Liebour Government.
Ah, but at least it’ll be fair. /s
So, they’ll be about 4.2bn down on what they hoped they’d get. That 22bn hole is getting deeper by the minute.
They’ll find a way to blame the Tories….
There’s no point in blaming the Conservatives (whether true or not) because the Conservatives are no longer in power. The question is “what are Labour going to do?”.
Make things even worse?
Adam Smith, 1776: “The Man of System. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it.”
The warning is there. Human’s have independent agency and don’t just do what the nitwits in charge want or expect – they can and do push back.
Elsewhere a private school is cancelling bursaries and scholarships for children from low income families, in order to cut its costs and reduce the affect of the 20% VAT to about 12%.
Well done.
The Cameron-Clegg-Osborne taxes started the damage. None of them have a clue snd none of them care. All they care about is damaging the Brits.
They hate us.
Once they “run out of other people’s money” (Thatcher) then they get voted out again. It is a cycle as regular as Autumn and Spring. Memories are short and the people forget how bad the people are that spend all of our money on their pet projects, so they vote them n again. It’s just a pity there isn’t a proper right wing party for people to vote for. I am hoping it is going to be REFORM