2019 Global Outlook: Economic reform in France
Another year, another missed opportunity for fiscal reform in France. Like his predecessors, President Emmanuel Macron has ended up mostly raising taxes instead of decreasing the size of government and reducing expenditures. The “national dialogue” to come following the Yellow Vest protests could bring better democratic representation – and with it, more economically responsible governance. But entrenched interests will put up stiff opposition.
Opinion: Yellow Vests are a symptom of France’s dysfunctional democracy
With the Yellow Vest protests, France has finally fractured between its metropolitan areas and a resentful low-wage periphery. What started as a tax revolt has become a diffuse and unstructured uprising against an unaccountable ruling caste. Many of the movement’s demands would only perpetuate France’s administrative and social centralism, yet its appearance shows that this political model may no longer be sustainable.
The benefits of global tax games
The growth of global trade and rise of more sophisticated financial products from the late 1970s has encouraged in tax arbitrage by multinational firms and tax competition between governments. This phenomenon has become a fixation of global governance do-gooders and bureaucrats. Their seemingly innocuous push for international tax coordination and transparency, however, will have costs that are hard to measure.
Russia breaks its social contract
In two decades of rule, Russian President Vladimir Putin has ensured stability by offering Russians an implicit social contract – a modest but secure social safety net in exchange for carte blanche in politics. Now, the country’s deepening financial and demographic crisis has put an end to this, forcing the government to make plans for increasing taxes and raising the retirement age by as much as eight years. No matter how cleverly handled, these austerity measures could trigger a serious backlash.
Opinion: The United States should rein in the global tax bureaucrats
President Donald Trump was right to disrupt the G7’s efforts to promote “fair, progressive, effective and efficient tax systems.” The goal may seem innocuous, but it is quite the opposite – favoring large, intrusive governments at the expense of individual economic freedom. One of the most damaging proposals to create a global tax bureaucracy is the Base Erosion and Profit Shifting (BEPS) project – a pet scheme of the OECD.
GIS Dossier: Trumponomics
Eighteen months into his presidency, Donald Trump has already implemented several major economic initiatives, including big tax cuts and rewriting American trade policy. Neither the disaster foreseen by his critics nor the miracle envisioned by his supporters has materialized. Instead, there has been a mix of positives and negatives for the U.S. economy, just as GIS experts had predicted since the election. This GIS Dossier reviews the unexpected consequences of “Trumponomics” and the impact it is likely to have in the future.
New narratives emerging on EU finances
The European Union’s inflexible budget process – constrained by seven-year Multiannual Financial Frameworks (MFFs) – has left the bloc almost incapable of handling major crises. The resort to ad hoc solutions over the past decade has only made the situation worse. Now, reformers are considering new revenue sources, and even more revolutionary steps such as EU taxes or a separate eurozone budget.
Emmanuel Macron’s shrinking revolution
French President Emmanuel Macron vowed to abolish France’s left/right political divide and shake up the country’s bloated bureaucracy. Yet his promised spending and tax cuts have been underwhelming, while his timid attempts to downsize the “layer-cake” administration have only stirred up fierce opposition. Time is running out for Mr. Macron to create a “shock of confidence” to get the economy moving.
Opinion: Europe’s misguided tax crusade
While the United States cuts taxes to spur growth, the European Union is blacklisting countries regarded as threats its fiscal system. The contrast speaks volumes about the economic priorities on both sides, and does not bode well for the long-term viability of Europe’s welfare states.
African countries move toward fiscal consolidation
Stung by falling commodities prices and growing donor fatigue, many African countries are expanding their tax bases. While at first blush this looks like a good move to liberate their economies from aid and resource dependence, it could also be a recipe for reducing investment and tamping down economic growth.