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 »