October 23, 2019 - 15:44 AMT
PanARMENIAN.Net - Reducing taxes to boost investment is a myth spread by businesses, says Abhijit Banerjee, who won a Nobel prize along with Esther Duflo of the Massachusetts Institute of Technology and Michael Kremer of Harvard University for their approach to alleviating global poverty.
"You are giving incentives to the rich who are already sitting on tons of cash," Banerjee said, NDTV reports.
A better approach would be to raise some taxes and distribute the money to people to spend, Mr Banerjee said in an interview Monday in New Delhi, where he was promoting his book 'Good Economics for Hard Times.'
"You don't boost growth by cutting taxes, you do that by giving money to people," he said. "Investment will respond to demand."
Countries from China to India to Indonesia are slashing taxes for businesses to spur growth amid a gloomy global outlook. The International Monetary Fund this month made a fifth-straight cut to its 2019 world growth forecast, pegging it at 3 per cent.
China earlier this year rolled out tax cuts worth $280 billion on personal income and corporate profits, while India surprised with corporate tax cuts worth $20 billion. Indonesia also plans to lower tax on companies to 20 per cent from 25 per cent.