The case for radical reform

After sleep-walking for so long, Europe’s policy makers appear to have finally woken up to the need for tax reform. As we reported in this week’s print edition, tax rates are being cut all over the continent:

In January France announced plans to cut payroll taxes by €30 billion ($42 billion). This month Italy unveiled income-tax cuts worth €10 billion for those earning less than €25,000 a year. This week Britain proposed tax cuts for most people on low or medium incomes. Ireland and Spain are also planning tax cuts later this year.

Such reforms are set to reverse the upwards drift in Europe’s tax-to-GDP ratios seen since austerity began. Politicians, such as Italy’s new prime minister, Matteo Renzi (see picture), have realised that taxpayers are fed up with paying ever higher rates. Taxes have become extortionate in some countries. For…Continue reading

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