Is Labour’s non-dom crackdown backfiring already?

It takes something when even the Guardian is warning you that your tax rises might end up costing more than they raise in revenue. The paper is reporting today that Treasury officials are becoming worried that the Office for Budgetary Responsibility (OBR) will conclude that plans to abolish non-dom status and its associated loopholes will persuade so many rich individuals to leave the country that, even with higher taxes, the government will be the net loser. If that is what the OBR concludes it will blow a hole in Rachel Reeves’ budget next month. Ending non-dom status was one of the handful of planned tax rises which the government was prepared to admit to during the election campaign. 

There must also be doubt as to how much net revenue will be raised by another of Labour’s planned tax changes: adding VAT to private school fees. An analysis by HMRC earlier this year presented a worst-case scenario in which 17 per cent of private school pupils transferred to the state sector – in which case the policy would raise £650 million, as opposed to the £1.6