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Tax Not the Cure for Turbulent Economy

Tax Not the Cure for Turbulent Economy
30 Jul 2012

The past year has seen sustained turbulence in the global economy, not least in the Eurozone where concerns over the financial stability of countries, most notably Greece, have been under the microscope. Whilst debate over the best resolution for such problems is ongoing, our survey reveals that an overwhelming 76% of global respondents do not believe that economic turmoil can be resolved through tax policy.

The Americas in particular consider tax policy to be immaterial with a staggering 87% responding negatively. There are numerous historic examples where countries have failed to solve problems through the implementation of tax based measures, such as the Hoover and Roosevelt tax rate rises to over 90% during the 1930s and 1940s. However, for every historic example of where tax policy has failed, there are instances where it's succeeded.

Richard Baxter, Taxand Global Indirect Tax Service Line Leader, commented:

"Europe has a North / South divide in terms of its ability to address macro issues through tax policy. Europe should be able to rebalance the economy through tax measures, but only if the political will is there. We've worked with many governments on tax reform initiatives and have seen first-hand these policies bearing fruits for their economies."

As countries worldwide continue to roll out austerity and growth models, multinationals must keep abreast of change and consider operational structures so as to maximise competitive moves for investment and minimise potentially damaging executive personal tax rates.

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