TAXPaying the Bill                    kpmg.com   KPMG INTERNATIONAL
© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independ...
ContentsIntroduction                                                                                   2                  ...
2 | PAYING THE BILLIntroductionHopes are high, and indications are promising, that the                                    ...
PAY I N G THE BIL L | 3CommentaryA Global Success Story?By the standards of past international economic crises, the       ...
4 | PAYING THE BILL39%                                                                                 Big Spending no Rou...
PAY I N G THE BIL L | 5The countries with the largest increases                                                           ...
6 | PAYING THE BILL                                                                                 Government as Partner ...
PAY I N G THE BIL L | 7But when we asked people how soon                                                                  ...
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Paying the bill_onderzoek_stimuleringsmaatregelen
Paying the bill_onderzoek_stimuleringsmaatregelen
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Paying the bill_onderzoek_stimuleringsmaatregelen

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Hopes are high, and indications are promising, that the global recession that began in 2008 is technically now over. And, like all the similar global economic crises that have preceded it, it casts a long shadow.



The consequences for public finance and taxation are challenging, as governments work to manage and reduce the debts that many have incurred in their stabilization efforts.



KPMG commissioned an international study, examining the views of businesspeople around the world on the succes or failure of their governments' economic stimulus programs, and on the best way to deal with the resulting public debt.



KPMG spoke to nearly 600 senior corporate decision makers from 26 countries. Their response revealed a clear divide between the US, Europe an the Asia-Pacific countries on the value of government intervention.



This report summarizes the results of this survey, and offers some insights into the possible future direction of public revenue policy around the world.

Published in: Economy & Finance, Business
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Paying the bill_onderzoek_stimuleringsmaatregelen

  1. 1. TAXPaying the Bill kpmg.com KPMG INTERNATIONAL
  2. 2. © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  3. 3. ContentsIntroduction 2 The European Experience 29 Belgium 30Commentary 3 Czech Republic 31 A Global Success Story? 3 France 32 Big Spending no Route to Popularity 4 Germany 33 Government as Partner vs. Government as Burden 6 Hungary 34 Ireland 35Paying the Bill 8 Italy 36 The Case for Tax Rises 10 Netherlands 37 Value for Money 11 Poland 38The Americas Experience 12 Russia 39 Argentina 14 Slovakia 40 Brazil 15 Spain 41 Canada 16 Switzerland 42 Chile 17 United Kingdom 43 Mexico 18 United States 19The Asia-Pacific Experience 21 Australia 22 China 23 Hong Kong 24 India 25 Japan 26 Singapore 27© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  4. 4. 2 | PAYING THE BILLIntroductionHopes are high, and indications are promising, that the These views on taxation are important, because theyglobal recession that began in 2008 is technically now represent the considered opinions of influential people,over. And, like all the similar global economic crises that who governments often turn to for advice. The extent tohave preceded it, it casts a long shadow. The potential which they will be reflected in actual policy decisions isconsequences of the recession in reduced opportunities something that can only emerge over time.for growth, lost jobs, new and increased regulatory This report summarizes the results of our survey, and offersframeworks and a simple reluctance on the part of many some insights into the possible future direction of publicpeople to boldly seize opportunities and risks that only two revenue policy around the world. We hope it will be of valueyears ago they would have considered a minor matter, will to policymakers, businesspeople, tax directors, CFOsbe with us for some time. and commentators, indeed anyone with a keen interest inThe consequences for public finance and taxation are the future development of global commerce and the roleequally challenging, as governments work to manage taxation should play in it.and reduce the debts that many have incurred in theirstabilization efforts.To coincide with KPMG’s latest European Tax Summit1,we have commissioned an international study, examiningthe views of businesspeople around the world on thesuccess or failure of their governments’ economicstimulus programs, and on the best way to deal with theresulting public debt. The effect on future tax initiatives isat the core of this discussion.Our researchers spoke to nearly 600 senior corporatedecision makers from 26 countries. Their responsesrevealed a clear divide between the US, Europe andthe Asia-Pacific countries on the value of governmentintervention, but much agreement on what tax and Ernst Gröblspending policies governments should adopt in future. Head of Tax, EMEA Region1 The 2010 KPMG EMEA Tax Summit in Prague, September 29 to October 1, 2010. © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  5. 5. PAY I N G THE BIL L | 3CommentaryA Global Success Story?By the standards of past international economic crises, the range of industry sectors, with annual revenues rangingresponse of governments to the global crisis that broke in from less than US$ 1 billion to more than US$ 5 billion. The2008 was swift, effective, and broadly successful. In varying countries represented were:degrees around the world, governments stepped in toincrease public spending, boost the supply of money in the Argentina Irelandeconomy and guarantee the health of important commercial Australia Italyenterprises. It was a concerted wave of public interventionin economic life that has not previously been seen outside Belgium Japantimes of war. Brazil MexicoThe immediate results are apparent in the speed with Canada Netherlandswhich many economies have returned to growth, or have Chile Polandresumed something approaching the levels of growth that China Russiathey were enjoying pre-2008. But even for the most resilientof economies, there is a price to be paid for government Czech Republic Singaporeintervention on this scale, in public debt that must be France Slovakiaserviced and ultimately repaid. Germany SpainFor many, especially those who are not convinced that Hong Kong Switzerlandgovernment stimulus programs were indeed a majorcontributor to avoiding depression, this price may be too high2. Hungary UK India USAs the generators of wealth from which the means to paythis price must come, businesses across the world clearlyhave an interest in what happens next. So, to discover what This report summarizes the responses we received. Itview businesspeople are taking of the efforts that their provides some insight into the views businesspeople aregovernments have made to keep their economies afloat, taking of the effectiveness of interventionist policies, andand how they think the resulting debt should be handled, their expectations for future policy on public revenues andKPMG’s Global Tax practice commissioned a research taxation.project covering nearly 600 senior corporate decision-makers in 26 countries.Independent researchers carried out telephone interviewsin April and May 2010. Their respondents were chiefexecutives and senior officers of companies in a wide2 I n this document, we use the phrase “government stimulus programs” to include all forms of government-led intervention with the aim of maintaining or boosting economic activity to counteract the effects of recession. This includes increased borrowing to support increased spending and bridge deficits as well as more formal intervention programs. © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  6. 6. 4 | PAYING THE BILL39% Big Spending no Route to Popularity Last year, in an international study governments had an important role to of business strategies for managing play, were much more likely to see a and surviving recession3, we found route to recovery through businesses that there was a clear divide between consolidating, regrouping and expandingEuropean businesses who the businesses of Europe and North into new markets.believe they are out of America, and those of the Asia-Pacificrecession, 39 percent say If the increase in public debt over 2008 countries.this is due to a recovery levels is a measure of the size of thein exports, and a further Put simply, Europeans and Americans stimulus programs that governments39 percent believe it is saw the crisis as a matter primarily put in place, then it seems thatdown to a recovery in needing decisive government governments broadly shared the viewsconsumer spending. action, while Asians, Chinese, and of their businesspeople. Singaporeans, although they thought Change in net debt as % of 2008 level4 80 73% 70 69% 60 53% 51% 50% 50 44% 41% 40 31% 30 25% 24% 20 18% 16% 14% 14% 14% 15% 15% 12% 10% 10% 11% 10 8% 8% 5% 0 0% -10 -20 -30 -35% -40 Chile Hungary Japan Czech Republic Argentina Belgium Germany Australia India Brazil China UK Switzerland Italy France Spain Russia Netherlands Slovakia Ireland Mexico Poland Hong Kong Singapore Canada USA 3 “ Never catch a falling knife” KPMG International, 2009 4 S ource: Economist Intelligence Unit. The EIU is the source of all public net debt information in this document.© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  7. 7. PAY I N G THE BIL L | 5The countries with the largest increases interventions would bring them some recovery for 45 percent, followed byin net debt are those where government support, they were sadly mistaken. This reduced interest rates, chosen byintervention was most demanded: year’s survey shows that among the 41 percent. Government stimulusIreland, Spain, the UK, Australia, the European businesses who believe they packages came third, chosen byCzech Republic, and the US. China, are out of recession, 39 percent say this 34 percent.Japan, Singapore, Russia and India is due to a recovery in exports, and a Among Asia-Pacific respondents,seem to have been relatively restrained further 39 percent believe it is down to however, government action is thein their spending, matching the less a recovery in consumer spending. Only clear winner, chosen as the maininterventionist preferences of their 24 percent attribute recovery to their contributor to recovery by 74 percent ofbusinesses. government’s stimulus package. respondents, with consumer spendingBut if the governments of Europe and In the Americas, increased consumer second, on 48 percent, and exportthe US thought that the size of their spending was the main contributor to recovery third on 41 percent.In EMEA and Americas the private sector has driven growth. 74% of ASPAC companies feel the recovery isdriven by their governments’ stimulus packages5Europe Asia Pacific Americas Recovery in exports 39% Government stimulus package 74% Consumer spending recovery 45% Consumer spending recovery 39% Consumer spending recovery 48% Reduced interest rates 41% Reduced interest rates 28% Recovery in exports 41% Government stimulus package 34%80 80 80 74%70 70 7060 60 6050 50 48% 50 45% 39% 39% 41% 41%40 40 40 34% 33% 32%30 28% 30 29% 30 24% 23% 19%20 20 20 12% 13% 10% 11%10 10 9% 10 6% 5% 6% 6% 3% 5% 4% 1% 1% 2% 2% 2% 1% 1% 1% 0 0 0 Recovery in exports Consumer spending recovery Reduced interest rates Government stimulus package Change in value of the currency Housing market recovery Market recovery Other Political change None/nothing Access to credit DK Government stimulus package Consumer spending recovery Recovery in exports Housing market recovery Reduced interest rates Change in value of the currency Political change Market recovery Other Access to credit None/nothing DK Consumer spending recovery Reduced interest rates Government stimulus package Recovery in exports Housing market recovery Change in value of the currency Political change Market recovery Other Access to credit None/nothing DKSource: Q. What have been the most important factors driving this recovery?5Base: All who believe they are out of recession (283) © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  8. 8. 6 | PAYING THE BILL Government as Partner vs. Government as Burden It is possible, of course, that about the levels of public debt their respondents from the Asia-Pacific governments have incurred, we might countries are reacting favorably to their expect low levels of support for stimulus governments’ actions precisely because programs and a clear desire for them the impact on levels of public debt has to be brought to a close as rapidly as been relatively low. possible. This is especially true if they are not thought to have been particularly Many of these countries were touched successful. relatively lightly by the effects of the recession, and some are now reporting This hypothesis is partly borne out by growth rates comparable with those our research, but not completely. There experienced pre-2008. If people in the are high levels of concern about public Asia-Pacific countries are seeing good debts in most of the large European results from relatively low levels of economies and the US. Concern is additional public expenditure, then we generally much lower in China, India, might expect them to approve of this Russia and Singapore (Argentina and and want it to continue. Japan stand out as exceptions, most likely due to their particular histories of Conversely, in those countries where major economic difficulty). businesspeople are most concerned Percentage of respondents very or extremely concerned about public debt levels6 80 75% 75% 70% 70% 70% 70 65% 60 55% 55% 56% 53% 50% 50 45% 40% 40 35% 35% 35% 30 25% 25% 25% 20% 20% 20 10% 10% 10 5% 5% 5% 0 Chile India Spain USA Switzerland Hungary Poland UK Singapore Canada Italy Ireland Russia Mexico Argentina Slovakia Hong Kong Australia France Czech Republic China Belgium Germany Netherlands Brazil Japan 6 Source: KPMG International, May/June 2010© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  9. 9. PAY I N G THE BIL L | 7But when we asked people how soon in favor of keeping these programsgovernment stimulus plans should be going for a year or more once growthwithdrawn following a return to growth, had returned. In the US and Canada,a subtly different picture emerged. In there were majorities in favor ofIndia, China, Russia and Singapore, as withdrawing them immediately.we might expect, there were majoritiesSlovakian and US businesses are most keen to remove the fiscal stimulus quickly on returning to growth –Russia and Ireland prefer to wait the longest7100 5% 5% 9% 10% 15% 20% 80 25% 25% 25% 28% 30% 35% 35% 35% 35% 37% 35% 25% 38% 45% 55% 70 32% 48% 40% 55% 55% 55% 65% 60% 40% 35% 25% 60 75% 5% 30% 35% 25% 35% 50 19% 25% 30% 35% 30% 30% 20% 27% 48% 40 20% 25% 10% 15% 15% 5% 10% 30% 30 15% 40% 5% 35% 55% 45% 10% 10% 30% 30% 25% 33% 20% 30% 23% 24% 15% 5% 40% 20 25% 5% 30% 20% 30% 15% 25% 30% 30% 20% 15% 5% 5% 5% 25% 10 10% 10% 20% 10% 20% 10% 5% 5% 13% 3% 5% 10% 10% 10% 10% 10% 10% 10% 7% 6% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 0 Total Slovakia USA Canada Australia UK Germany Czech Republic France Netherlands Hungary Belgium Brazil Japan Argentina Switzerland Spain Italy Poland Chile Mexico Hong Kong India China Singapore Ireland Russia Other, None/Nothing, DK 12 months after a return to growth Immediately following a return to growth Two years after a return to growth 6 months after a return to growthIn many European countries, however, on recovery of a rapid withdrawal of anything that might possibly contributethere was significant support for government support. to future growth.keeping government support programs It’s interesting to compare this with European businesspeople doin place for six months or longer, despite our earlier finding, that European understand the cost of this approach,the high levels of concern expressed in respondents place their governments’ but given the perceived threats to theirthese countries over public debt. There stimulus packages only fourth in the list prosperity from new competitors inis clearly an ambivalent view among of factors promoting recovery. Perhaps Asia Pacific and declining markets inEuropeans, who do not welcome the this result reflects a general lack of the US, it appears to be a price they areprospect of higher taxes or public confidence in the prospects for further prepared to pay.spending cuts to pay down public debts, recovery, and a wish to keep in placebut are anxious over the possible impact7 Source: KPMG International, May/June 2010 © 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.

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