The financial environment doesn’t feel encouraging. The eurozone crisis is now dominating the headlines; in the US, despite the administration’s success in negotiating an agreement to head off paralysis and default, there is growing talk of a second recession and across the globe, policy-makers are struggling to tackle budget deficits and rein in spending.
This inevitably leads to a much closer focus on tax, one crucial factor in the national income-expenditure equation. The temptation to turn to tax rises to balance budgets is clear, but it is a quick fix only and likely to lead to future stagnation. Competitive and predatory corporate tax policy could lead to protectionism and mutual impoverishment. Getting the balance right will be critical.