Remove taxes to boost growth

Cuts in income taxes for low earners can help an economy escape recession, according to new research published today. Long term growth can be encouraged by switching the tax burden from income taxes towards housing and consumption taxes, said professor Christopher Heady and a team of OECD researchers. A shift of one per cent of tax revenues in this direction could increase an economy’s long-run output by between 0.25 per cent and one per cent. And during recovery, the best taxes to increase are taxes on consumption and ownership or occupation of houses, they argue in February’s issue of the Economic Journal.