Michael McMahon's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of Economics

Voting history

Greece’s elections and the future of the Eurozone

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Agree
Confidence level:
Confident
Comment:
It depends on the extent of the majority they obtain, but if they get a good election win I think it will have an effect on other countries spreads. I do not think it would affect peripheral countries equally, but rather would be focused in those peripheral countries where there is growing popularity of anti-Troika/anti-austerity parties. It would also likely mean that markets would react more adversely in these countries to any future political about the popularity of these parties.

2014 Autumn Statement

Question 1: Do you agree that the scale of this planned reduction in total managed expenditure is credible?

Answer:
Disagree
Confidence level:
Confident
Comment:
I don't believe that the scale of the spending reductions is possible. I think it the actual executed plan is much more likely to require (a) an even slower transition to surplus, and/or (b) tax changes either from a recovery of income tax rates (see next question) or higher taxes from other tax instruments.

 

Question 2: Do you agree that the underperformance of tax receipts in recent years, provides a strong case for higher taxes?

Answer:
Disagree
Confidence level:
Confident
Comment:
I believe it is likely that tax revenues will have to be increased. This does not mean that rates on tax instruments which have underperformed, e.g. income taxes, need to be raised. There are two issues: 1. do we think that the underperformance will be persistent, or whether there could be a faster than expected pick up in tax receipts as / if the recovery gathers pace; 2. it may be an opportune moment to rethink the use of all tax instruments and to reoptimise toward taxes other than income taxes.

Devolving Income Tax Powers within the UK

Question 2: Do you agree that that there is a clear economic case for establishing "English votes for English laws" with the same tax and spending powers as the Scottish Parliament?

Answer:
Agree
Confidence level:
Confident
Comment:
Devolution of power may even benefit regions within England. This would allow, for example, the North of England to compete with Scottish fiscal decisions, as well as competing with the South of England.

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Confident
Comment:
I can see some potential benefits but my main concern is that there could be detrimental effects of income tax competition which affect the allocation of public services. Moreover, in the absence of devolved borrowing powers, there could be a large cost from counter-cyclical fluctuations in taxes as I am not confident that there would be enough discipline to build up sufficient resources in good times.

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