AltAusterity Digest #118 October 31 - November 6, 2019

The Ontario Conservative Government’s fall economic statement has projected a deficit of $9 billion for 2019-20 fiscal year. The Conservatives have been accused of artificially inflating deficit projections as a justification for spending cuts. The figure has consistently been revised downwards, with the deficit projection from the spring coming in at $10.3 billion. In an accounting slight-of-hand, the Conservatives have defined cancelled spending cuts as spending increases. The Conservatives have accounted for an additional $1.3 billion in spending from the April budget, but this figure comes from a reversal of planned spending cuts that have been put back on the government’s books.

OECD-led tax reforms are taking aim at multinational corporations that use tax shifting as a form of tax avoidance. Companies like Google, Apple and Facebook, who have offices in multiple countries have been shifting and declaring profits in low-tax jurisdictions. Swiss President Ueli Maurer has said this could result in over 5 billion Swiss francs ($5.06 billion) in lost revenue for Switzerland. Other countries Maurer identified that could face lost revenues due to their status as being tax relief jurisdictions for multinationals include Luxembourg, Ireland, Sweden, New Zealand, Canada, Singapore, the UAE and Saudi Arabia. The OECD aims to have 134 countries as signatories to an outline agreement in January.

Brazilian President Jair Bolsonaro has rolled-out a range of austerity measures aimed at reducing public expenditure and assets. The two largest privatization proposals are aimed at Brazil’s largest public utility, the state-run energy company Eletrobras, and the government’s mint monopoly. The privatization of minting would allow a private contractor to print Brazil’s currency. In terms of Eletrobas, Mines & Energy Minister Bento Albuquerque has said the government will retain a significant stake, though not a majority. It also plans to limit ownership concentration, with no shareholder able to own more than 10%.

Regardless of who wins the upcoming UK election, the party or parties in charge are projected to break rules on public spending. Based on the spending promises or major parties, the Institute for Fiscal Studies (IFS), a UK-based think-tank, has estimated that the UK government will be running deficits in each of the next five years. While both the Tories and Labour are considering significant increases to expenditures, they differ on how to increase revenues. Labour has planned to raise an additional £49bn in taxes, while the Tories seem to be emphasizing tax cuts to fuel growth. 

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