Tax and Fiscal Policy

Increasing tax won’t help pay back pandemic debt


In the Media

IEA Research discussed in The Independent

Matthew Lesh quoted in The Times

Matthew Lesh, Head of Public Policy at the IEA, has been quoted in The Times commenting on the approaches to Covid debt repayment proposed as a part of the leadership contest. 

Reflecting on the use of consols to extend the repayment period, as were employed during the First World War, Matthew said:

“The theory behind this is that the Covid debt is a one-off equivalent to a war (…) It’s not ongoing spending that’s going to keep adding to the debt and therefore you shouldn’t think about it when you make the decisions today.”

“The evidence is that increasing taxes isn’t a particularly effective way to bring down debt and deficits because it risks slowing economic activity. The best way to get the deficit down would be to cut spending, but I don’t think either candidate wants to promise to do that.”

Read the full article here.