Opinion Editorial | |
| Monday, October 26, 1998 | |
Many Governments are Raising Taxes |
Many conservatives have been highly critical of Republicans in Congress for not passing a tax cut this year. Although such an action would have been helpful economically, the fact is that no tax cut could have been enacted given Bill Clinton's promise of a certain veto. However, although U.S. taxes will not come down this year, at least they are not going up, as seems to be the case almost everywhere else these days (see figure). In Canada, businesses are complaining that they can no longer hire and keep good employees, especially in the high-tech field, because of heavy taxes. Earlier this month, the Business Council on National Issues issued a statement calling upon the government to enact a 20 percent tax cut in order to stem the brain drain. "Canada's high rate of personal taxation on middle to high incomes...threatens the country's future," the group said. "They drive away the mobile, highly skilled employees who hold the key to growth in a global, knowledge-based economy." Like here, however, a liberal government strenuously opposes tax cuts despite a budget surplus. In Germany, the new leftist government is pushing for higher taxes, even though almost all economists agree that the country's already high taxes are stifling its competitiveness. The government plans higher taxes on gasoline, heating oil, natural gas and electricity. It also plans to raise corporate taxes by curtailing deductions and tax preferences. Although some taxes will be cut, the overall effect will be to shift more of the tax burden onto corporations, which already pay among the highest taxes in Europe. The worldwide trend toward higher taxes is not limited to liberal governments. In Australia, the conservative Liberal-National Party recently squeaked to re-election despite promising to impose a new value-added tax (VAT). Canada's imposition of this form of national sales tax in 1991 is one of the main reasons for the high tax burden there, as well as causing the ouster of the conservative government that imposed it. It is highly likely that once Australians experience this new tax, the Liberal-National Party will quickly suffer its Canadian brother's fate. In the meantime, one can safely predict an increase in the already high Australian tax burden. Finally, we see that the trend toward higher taxes is not limited to major industrialized countries. A few days ago, Zimbabwe, one of the poorest countries in Africa, announced a new 10 percent "supertax" on the rich to pay for increased government spending. And who are the rich? Everyone making more than $19,000 per year.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 26, 1998. Home | Support Us | All Issues | Social Security Debate Central | Contact Us |
