Filed under: Tax
When a country is slashing and burning to try and make ends meet tax cuts are usually few and far between. But when there is an option to ease a tax burden should it be given to individuals or businesses?It might seem like an obvious answer; individuals, who are weary from the rounds of austerity measures, should be given a bit of a boost. Of course, let us not forget that a tax break does wonders for votes as well.
But is giving the public a tax cut just a short term solution and a way to win votes?
Ireland must seem to think so. It has come to light that in 2011 - a year after Dublin was bailed out by the international community - that a group of financial bods, accountants and public servants, known as the 'Clearing House' met to thrash out tax plans.
It decided on a tax break for highly-paid executives recruited from abroad, tax perks for financial groups and a commitment to keeping corporation tax low at 12.5%.
In short, businesses got it all and the citizens had to pay the cost.
Big business has a lot of clout, it has a huge capacity for lobbying and threats to move to more tax-friendly countries are a beneficial bargaining tool for them. When an individual decides try don't like tax policy they can leave the country or wait until the next election - when nothing is guaranteed to change.
I agree that some of the tax breaks offered up to businesses are unfair - why should wealthy executives be given more beneficial ya treatment that those on modest incomes. But when it comes to keeping taxes for companies low it makes sense from a long-term point of view.
Cutting income tax for example may help consumers a little bit now but encouraging people to start up a company, expand an existing one or attract companies from overseas with low corporation tax is taking advantage of a longer term position.
What countries have to weigh up when it comes to tax is what's best for the future. We have seen the ill effects of short-sighted policy, it is what got us into the global mess we are in today. 372
Maybe if politicians looked at what's best for everyone long term they would be able to tackle the real problems of growth creation and stability rather than scoring points on tax tweaks And rearranging the tax rules as the country sinks.