By Tom Matsuda (BA International Relations and Japanese)
The International Monetary Fund (IMF) has released a report saying that higher tax rates would not necessarily harm economic growth rates in major economies.
Moreover, the Washington-based international organisation has also stated that this would reduce the high levels of economic inequality seen across the globe.
Although external inequalities between countries has lessened, the report highlights, income inequality within countries has increased.
Austerity has been a key economic policy of the current UK government, which the IMF report goes against. In fact, it suggests that policies proposed by Labour leader Jeremy Corbyn are in fact more economically viable.
Rather than cutting public services and reducing access to higher education, it states governments should be aiming to spend more on public services, in contrast with the policies of Theresa May and previous Tory governments.
However, as the report suggest, this is not just an issue in the UK. China, India and the United States have also witnessed higher levels of income inequality. Due to a failure to tax the upper one per cent, the wealth has mainly stayed in the higher echelons of society without trickling down.
If this worrying trend continues, the report warns of lack of “social cohesion… political polarisation and ultimately lower economic growth”.
These elements can sadly already be seen today in the UK and also internationally.