Tuesday, September 28, 2010

Which Countries Would Prefer to Raise Taxes or Cut Spending

Today The Economist published a survey from GlobeScan and PIPA for the BBC World Service that asked over 22,000 people in 22 countries which of these paths they would prefer their governments to take to reduce their country’s deficits: Increasing taxes, Cutting public services, Both, Neither or Other

(see link below for the picture)

In general, most people favored ‘Cutting public services’ more than anything else. More than 75% of people in France, Spain and Brazil really believe that ‘Cutting public services’ is the key to reducing the deficit in their countries. People in other countries like Britain, Mexico, Australia, Canada and Germany divide their opinion between ‘Cutting public services’ and ‘increasing taxes’. One quarter of the people in Russia and Turkey want their government to focus in neither ‘Cutting public services’ nor ‘increasing taxes’.

The interesting question here is what are the current level of ‘government spending’ and ‘effective taxes’. Is this survey just showing a return to the mean? Should we think that Brazil, Spain and France have economies more dependent on government spending? Should we think that Britain has a more balanced economy? What factors are influencing these answers?

Link to The Economist: