As governments across the globe struggle to stimulate economic growth and fund social programs, many are turning to a seemingly easy solution: taxing labour income. The idea is to tap into the earnings of workers and employers, generating much-needed revenue without having to implement more complex tax reforms. However, experts warn that this approach risks undermining the very incentives that drive economic growth: the desire to work and hire. By increasing the tax burden on labour, governments may inadvertently discourage people from entering the workforce, reducing productivity and economic output in the long run.
Governments tap labour income as an ‘easy’ revenue raiser but risk undermining incentives to work and hire
