Degression

Degression refers to the process of reducing or eliminating a tax, fee, or other financial obligation over time, typically to encourage economic activity, ease financial burdens, or adjust policies in response to changing circumstances. This concept is commonly applied in taxation, where progressive or regressive tax systems may be modified to become less burdensome for certain groups or sectors. For example, degressive taxation might involve lowering tax rates for specific income brackets, reducing excise taxes on certain goods, or phasing out subsidies that have become overly costly.

In economic policy, degression can be used to stimulate growth by reducing the cost of production or consumption. For instance, lowering corporate tax rates or removing tariffs on imported goods can encourage investment and trade. Conversely, it may also be employed to address fiscal imbalances, such as reducing government spending on certain programs to curb budget deficits. In some cases, degression is part of a broader strategy to transition away from subsidies that have become unsustainable, such as gradually phasing out agricultural subsidies to encourage market-driven farming practices.

Critics of degression argue that abrupt reductions in taxes or fees can lead to unintended consequences, such as decreased revenue for public services or increased inequality if the burden shifts disproportionately. Supporters, however, contend that gradual degression allows for better planning and can foster long-term economic stability. The approach varies depending on the context, with some governments implementing degressive measures as part of broader economic reforms, while others use them to address specific policy objectives.