Taxes and the road to recovery

Either politicians have the courage to redistribute wealth or major conflicts are imminent. Either way, you can sometimes hear it when it comes to question who pays for the Corona pandemic and how should an economy’s recovery be done. What do economists say?

Alfie Stirling and Sarah Arnold from the New Economics Foundation explain the situation for the UK and discuss when taxes should be raised or cut. Sure is, “.. the government should not be raising taxes during a crisis. More than anything, the economy needs money in people’s pockets — especially the very poorest, who most need the cash and are most likely to spend it.” They argue against austerity which includes higher VAT and cuts. On the contrary, the best way were government investments: “A far better way to boost demand now would be direct investment by government. This could come in the form of boosting public services by increasing both pay and the number of jobs for key workers, as well as by investing in much needed green and social infrastructure — such as home insulation and electrified transport — and social housing.”

Photo by Kelly Sikkema on Unsplash