Having considered both sides of the Brexit debate, many observers have come to the rather depressing conclusion that the United Kingdom is in a no-win situation with regard to its position in the European Union. It has been argued by those campaigning for a Brexit that the Remain campaign is preying on voters’ fears about the economic impact of Britain leaving the EU, especially with regard to tax and spending. Yet it’s also difficult to see how Brexit won’t have negative repercussions for the British economy, at least in the short-term. It’s just that we don’t know what those ramifications will be (although we can have a good guess: tanking pound, financial turmoil, plummeting foreign investment, etc.), or how severe they will be and how long they will last. The notion put forward by Brexiters that once detached from the … Read More »
A group of 50 economists recently signed a letter imploring the Australian Government not to cut corporate tax, a move which is being viewed as perplexing by some observers in a country which now has an unfashionably high rate of corporate tax, at 30 percent, and is beginning to trail the pack of leading industrial and developing economies by some margin, the OECD average now being about 24 percent.
Of course it’s also easy to make the case, as the aforementioned economists have, that this is a matter of fairness, and that the Government should put the vulnerable in society first, and not, as the letter argues, give tax cuts to big business. All of which sounds wholesome and worthy, but Australia is in a bit of an economic and fiscal hole at the moment, having suffered particularly badly at … Read More »
It’s difficult to know where to begin with the Panama Papers affair. Predictably, most people have latched on to the “us and them” angle – how the rich, powerful, and well-connected get to live by a different set of rules from those who pay tax in full. The world does seem like a very unfair place sometimes. But it’s difficult also not to highlight the hypocrisy of some of the world’s leading politicians, who seem to rule by the mantra of “do what I say, not what I do.”
That being said, it might be an unpopular thing to say, but the massive irony about all this is that the vast majority of people named in the Panama Papers probably have done nothing illegal. Yet nobody has drawn attention to the crime that was committed to create this exposé in … Read More »
The trouble with governments is that they tend to have short memories. This is especially the case in your average democracy, where the lifespan of a government is usually no more than a few years. This can mean that sometimes they fail to learn from history. And one of the latest countries that looks like it could be about to repeat a fatal economic policy error is Sweden, which intends to increase the banking sector’s tax burden in the next Budget.
Now, I expect few people will have very much sympathy with the banks when they complain about being overtaxed, given that the industry has largely got away with a great deal. But governments do have to be mindful that punishing the banks can have unintended consequences. Sweden’s bankers are already warning that the proposal to abolish the interest deductibility of … Read More »