Costas Milas's picture
Affiliation: 
University of Liverpool
Credentials: 
Professor of Economics

Voting history

The “Spend Now, Tax Later” Budget

Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?

Answer:
Other, or no opinion
Confidence level:
Confident
Comment:
About (rather than just) right...

Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?

Answer:
Moderately
Confidence level:
Confident

Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?

 

Answer:
Moderate damage
Confidence level:
Confident
Comment:
Corporate taxation affects business investments and, consequently, both UK’s productivity and international competitiveness. UK business investments depend on the spread between the UK corporate tax rate and the corporate tax rate in the rest of the world. At 19%, currently, the UK corporation tax is well below the OECD average of 23.39% (https://stats.oecd.org/index.aspx?DataSetCode=Table_II1). From my econometric calculations, an increase in the UK corporate tax rate by six percentage points (assuming no change in the corporation tax for the rest of the world) will reduce UK business investments by a massive 16.8% in the (medium to) long run. This will apply to the larger 10% firms in the UK so the long-run negative impact of business investments will not be as bad as initially feared. That said, the problem is here is that the larger firms are, in fact, the ones most likely to invest. On the other hand, the rest of the world will also have to raise its corporation tax to tackle the rising COVID-19 debt. Put everything together to conclude that international competitiveness will face (through the hit in business investments) a moderate damage in the medium run.

The ECB’s Green Agenda

Question 2: Would you support changing the ECB’s mandate to incorporate the EU’s target of carbon neutrality by 2050, if such a change is deemed legally necessary to adopt your preferred approach?

Answer:
Yes
Confidence level:
Confident

 Question 1: Which of the following actions is the most advisable approach for European Central Bank to address the environmental impact of its bond-purchasing policies?

Answer:
Actively biasing its portfolio towards green investments
Confidence level:
Confident
Comment:
Although I am keen to see a bias towards green investments, there appears to be some inherent contradiction in the whole debate. Indeed, the ECB’s QE programme by definition will be short lived. So it appears rather futile for the ECB to support green technology now (or at least in the short run) only to ‘pull the green plug’ later on when QE is abandoned. Which brings into the picture the importance of a change in the ECB's mandate.

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