Taxing Surveys

Slí Eile: Do you think the Government can tax its way out of its economic difficulties?
In answer to this online Irish Times poll, it is surprising that as many as 20% thought it could. I wonder what the proportion would be if, instead, the question was:
Do you think the Government can cut its way out of its economic difficulties?
or try this one:
Do you think the Government can borrow its way out of its economic difficulties?

What choices do you have? The implication with the 'tax the country out of its economic difficulties' question angle is that it tilts towards the view that spending has to be cut, or borrowing increased, or both. It’s a loaded question to start with.

My answer to the tax question is no. No, because tax increases, alone cannot generate the economic vitality to restore spending, confidence and job creation. Many things are involved. When it comes to fiscal policy we do best to:

Do no harm, by not adopting a deflationary approach which is exactly what Government is doing and will continue to do;
Redirect spending from areas of inefficiency and inequitable subsidisation of the well-off, to areas of greater impact on equality and public service delivery;
Increase taxes by broadening the tax base, removing many of the inequitable tax breaks, increasing carbon taxes, property taxes and marginal tax rates on high-income earners;
Use a range of 'real economy' measures to complement a strategic focus on job creation, capacity building;
Use off-balance sheet borrowings through a National and European Recovery Bond.

Posted in: Fiscal policy

Tagged with: fiscal stimulus