Monday, 18 April 2016

Why Reduction in Taxes is Not a Good Idea for Greece at the Moment

There is a growing number of politicians and academics in Greece, who argue that the solution to the country’s economic problems is a mixture of policies, which entail a reduction in taxes and government spending at the same time. Indeed, if we examine these two policy options separately, or apply them in another context, it would make sense. Reducing taxes would aim to stimulate consumption and investment, which could boost economic growth. A reduction in government spending would save money, improving the country’s public finances. However, in the case of Greece, there are several counter-arguments to these claims, which concern the efficiency of this combination.