You can’t use your GDP to pay off debts. Wouldn’t it be better if we used how much % of a goverments budget goes towards servicing debts?
You can’t use your GDP to pay off debts. Wouldn’t it be better if we used how much % of a goverments budget goes towards servicing debts?
Tried to answer, but it got very convoluted, here it is anyway as I typed it out…
Because that’s a less useful metric basically, to change their budget a government can:
This means that a budget can swing quite a bit in value quite quickly if needed (or if something goes wrong). This means the % could swing quite widely.
GDP on the other hand is effectively the value of the economy, so moves slower and is a better metric to compare different countries with different economies and tax systems (assuming they tell the truth about their GDP…)
Ultimately, if a government needs more money, most of the time it can get it… But whatever they do will have side effects. But those side effects depend on the size of the economy, the bigger the economy (measured by GDP) the more can be done/taken without causing a large effect.
Both of these fail to highlight countries that already have a high tax load though, so in practice a wide range of metrics will be used.