Take Your Hands Out Of Your Pockets!
Spain and Italy are both in tax-cutting mode this week, the former more convincingly than the latter. By the time you’ve climbed to the top of the greasy pole, you’ve probably had to shed most of your principles (if you ever had any) as “not wanted on voyage,” and in any case you can only go as fast as your party and the economy you inherited will allow you.
Despite his rhetoric, Mariano Rajoy certainly didn’t have much opportunity to display any right-wing anti-tax credentials during his first turbulent months in office, when it was a question of preventing the ship from sinking. Now perhaps things are a bit different, and Rajoy’s announcement of job-enhancing social security cuts may have a real impact on the economy, especially since restrictive employment protection laws have been loosened to some extent. Cutting into the appallingly high youth unemployment rate must surely be the Government’s highest priority.
It would be good to believe that Matteo Renzi across the water in Italy has the same good sense, but his initial appearances before parliament (of which he is not a member) were unconvincing, and his proposals seem to owe more to political rather than economic necessity. He says that his tax cuts will be paid for by “spending cuts, and the remainder from reducing inefficient and unused corporate subsidies.” Well you know what I think of politicians who wave spending cuts around like Dame Edna waves bunches of gladioli; and as for corporate subsidies, if they are “unused” then scrapping them won’t save money, will it? And if they are used, scrapping them is a tax increase, isn’t it? So you’ll have to try harder, Matteo, and by the way, it’s best to take your hands out of your pockets when you address the nation. Didn’t anyone tell you?