Letters to the editor

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The VAT trap

Raising value-added tax (VAT) can indeed be a good way to raise revenues, but such a policy shift is not without potentially damaging side-effects that governments should bear in mind (“The case for VAT”, September 28th). One important side-effect is the impact that increases in the tax can have on corporate investment if shareholders demand more dividends to fund their now more costly consumption.

This “VAT trap” is more marked in countries with a relatively short-term culture, such as America, Australia and Britain. When shareholders value their current consumption more than that of future generations, investments go down when VAT goes up. In countries with a more long-term culture, such as Germany, Japan and South Korea, VAT does not distort investments as much. In these places, a rise in VAT can be a good solution.

What is a good alternative for short-term oriented countries? A slight increase in the personal-income tax on wages, especially on those earning higher incomes, might help raise revenues without doing too much harm to the economy. It is, however, important to raise the tax rate only moderately to avoid giving an incentive to those worst affected by such a move to pack their bags and leave.

Martin Jacob
Professor of accounting and control
IESE Business School
Barcelona

How it works in Spain

The minority coalition government led by Pedro Sánchez in Spain has certainly required negotiation and compromise with regional parties, but to imply that this erodes democracy is an extraordinary leap (“In office, but not wholly in power”, October 5th). The deal with Catalan and Basque nationalists, though contentious, is a pragmatic response to Spain’s decentralised political landscape and a common practice since 1993, not a Machiavellian betrayal. Even José María Aznar, a former conservative prime minister, had to pretend in 1996 that he “spoke Catalan in intimate groups”, just for the sake of parliamentarian arithmetic.

Yes, Mr Sánchez’s amnesty and fiscal promises have sparked debate. However, they were passed through Spain’s democratic institutions, following the rule of law and regular procedures. Describing these decisions as constitutional “back-door” dealings while ignoring their legal and parliamentary foundations is a selective reading of events. One might wonder whether the real issue here is not the fragility of democracy but the discomfort with regional politics that has long been part of Spain’s DNA.

You did point out the bigger picture: a recovering economy, improved employment figures and a political opposition still mired in fragmentation. Surely, Spain deserves a more nuanced analysis than a gothic narrative of democratic doom, and the caricature of Mr Sánchez as a power-hungry operator.

Alejandro Guerrero
Paris

Wither UNRWA

Phillipe Lazzarini, the head of UNRWA, the UN’s agency for Palestinians, was appallingly selective in his empathy (By Invitation, October 2nd). Not a word about the murdered, tortured, raped, mutilated and kidnapped Israeli victims. Nor about the tens of thousands of Israelis who have had to evacuate their homes under the torrents of rockets launched by Hamas and Hizbullah. No reference to Hamas’s own indifference to the loss of Palestinian life caused by the deliberate embedding of Hamas terrorists in homes, schools, mosques and indeed in UNRWA facilities. The tragic loss of Palestinian life in this war is a central and cynical tactic used by Hamas.

Selective empathy is a problem. UNRWA is part of a UN framework that uniquely and perversely fosters the eternality of Palestinian refugee status.

Joel Eisen
Richmond Hill, Canada

EVs will not rule the road

Global sales of hybrid cars are destined to decline, you said, because of improvements in electric vehicles that run purely on battery, or BEVs (“On a detour”, September 21st). However, hybrids and BEVs are not competing for the same mobility niches. Some 95% of electric-vehicle sales worldwide are in America, China or the European Union, and concentrated in the densest and most urbanised parts of those markets. The mobility needs and infrastructure capacity of these areas differ dramatically from those of rural economies and the global south. For the latter, hybrids and internal-combustion engines are going to be essential for decades to come in order to provide high-range transit that can maintain critical rural-urban links.

Mobility providers should not focus on a single technology or energy solution. Rather, they need to reflect on not only what consumers need, but on whether the local market itself has the infrastructure to support those needs. The industry has to shift away from the idea that one size fits all. To decarbonise a diverse world we need a mix of technologies. More efficient hybrids will be one important decarbonising solution, along with innovations in synthetic and alternative fuels.

There is no such thing as a global, universal mobility solution.

Matias Giannini
Chief executive officer
Horse Powertrain
London

What colleges should learn

Raising university-tuition fees in Britain (“Universities challenged”, September 21st) would fail to tackle the need for more fundamental changes in the higher-education sector. Universities are still largely analogue services in a digital age, with an outmoded model of instruction that has barely changed in decades. Individual lecturers develop and deliver modules for small classes, a highly inefficient process.

Higher education’s Blockbuster-Netflix moment is fast-approaching; a radical change in universities’ operating model brought about by the economies of scale provided by digital technology. Universities should be looking at how they can work together to build high-quality hybrid offerings. Call this the WeLearn model; an artificial-intelligence enabled teaching available to all students that provides a wide-range of courses, skills training and applied learning. All this combined with the social experience of campus life.

Britain is in a strong position to capitalise on this opportunity and shape a better future for higher education. What the sector needs is innovation, not fee inflation.

Dr Richard Milburn
War Studies
King’s College London

Don’t look so glum

“Fashion photography jolts the viewer out of the grim and the quotidian”, you say (“Very in vogue”, October 5th.) Yet the vast majority of fashion models themselves look grim. On the catwalk and on the page they hide any evidence of enjoyment in the clothes they wear. They must look as though they have just argued with the designer and lost, becoming unsmiling, aggressive posing machines daring the viewer to look them in the eye. They become coat hangers, their humanity lost to art.

Robin Laurance
Oxford

Bon déjeuner

Clearly Bartleby never had a working lunch in a meeting room in France (September 28th). I have had many, and I can assure you that two things are guaranteed: superb catered food that is devoured by everyone, and French colleagues loudly complaining that working during lunch is barbaric.

Jem Eskenazi
London

Correction (October 18th 2024): Contrary to what the letter originally stated, hybrid vehicles and those that run purely on batteries are not competing for the same mobility niches.

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