NCPA - National Center for Policy Analysis

Many Governments Are Raising Taxes

October 26, 1998

Conservatives have criticized Congress for not passing a tax cut. A tax cut would help economically, but at least they are not going up, as seems to be the case almost everywhere else (see figure).

In Canada, for instance:

  • 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.
  • However, a liberal government strenuously opposes tax cuts despite a budget surplus.

Also, in Germany, the new leftist government is pushing for higher taxes on gasoline, heating oil, natural gas and electricity, even though almost all economists agree high taxes are already stifling competitiveness. The government plans to raise corporate taxes, shifting more of the tax burden onto corporations, which already pay among the highest taxes in Europe.

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.

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.

 

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