Bargain hunters seeking better government

An international survey by KPMG suggests that a more mobile global workforce is bargain hunting for a better deal from governments.

“Top rate personal income tax rates around the world have fallen by an average of 2.5 percent in the past six years, as governments strive to balance their need for revenue with the impact of increasing global labor mobility, a new study from KPMG International has found.”

And the effect on income tax appears to be encouraging even if modest.

Of the 87 countries surveyed, 33 have cut their rates in the past six years and only seven have a higher top rate in 2008 than they did in 2003.

However Australia might still need to lift it’s game.

“Australia also cut its personal tax rate by two points to 45 percent last year,” said Rosheen Garnon, head of KPMG’s International Executive Services practice and a partner in the Australian firm, “but if the intention was to attract back high value Australian workers who have temporarily moved to Hong Kong or Singapore, it may not be enough. It is common to hear from foreign workers that once families have become accustomed to the huge increase in spending and saving power that low tax rates provide, it can be very difficult to justify going home.”

3 thoughts on “Bargain hunters seeking better government

  1. I’m sure this issue will become bigger and bigger as the population ages and countries that historically have supplied a lot of professionals become rich enough such that their own professionals don’t move as much or start moving back home (notably China). I imagine the solution with respect to Australians departing will be to call them un-Australian and then complain about not having enough professionals.

  2. It’s a race to the bottom! But I predict most of the current low tax havens will end up as social democracies with equivalent tax structures.

  3. So in other words increased workforce mobility moves the laffer curve to the left. No wonder taxes on international flights are so high!

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