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The IMF proposes a temporary tax on high incomes and multinationals to pay the bill for the crisis

2021-04-07T16:25:36.514Z

The objective of the temporary tax is to rebalance deficit and debt levels in countries with fewer resources



Kristalina Georgieva, Managing Director, IMF Reuters

High incomes and companies that have prospered during the coronavirus - big technology or some pharmaceutical companies, for example - should pay additional taxes in solidarity with those most affected by the pandemic, according to the proposal launched this Wednesday by the International Monetary Fund (IMF ), meeting virtually in Washington for its spring assembly.

Vitor Gaspar, director of the IMF's Fiscal Affairs Department, has been very clear: “To help address the financing needs related to the pandemic, the authorities could consider a temporary contribution to the post-covid recovery applied on high incomes and wealth, "he said Wednesday.

It is a temporary tax, popularly called solidarity tax, to finance peremptory needs derived from the health emergency and the economic crisis triggered by it, which has caused a general increase in the levels of deficit and public debt, especially in the markets. emerging and developing countries.

To prevent these countries from lagging behind in the recovery and persistently suffering the effects of the pandemic, the agency proposes a temporary fund ―a 'covid rate' - to channel resources that allow access to basic services and ensure networks of social security, among other objectives.

The tax would help balance social inequalities exacerbated by the emergency and send the message to those most affected that the fight against the pandemic is a collective effort, explained Vítor Gaspar, director of the IMF's Fiscal Affairs Department.

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Gaspar acknowledged that "pre-existing inequalities have amplified the adverse impact of the pandemic and, at the same time, covid-19 has aggravated inequalities", which implies "a vicious circle of inequality that could lead to a social and political breakdown ”.

The IMF has recalled that these types of temporary additional rates of personal income tax, usually restricted to the highest income brackets, were previously introduced in exceptional circumstances such as the reunification of Germany (1991), or in Japan after the Fukuyama disaster (2011).

The Fund considers extra benefits - those that exceed the minimum required by investors - as a contribution from companies that have prospered during the crisis, such as some pharmaceutical companies or highly digitized companies, without affecting others with minimal profits or losses.

Gaspar has recognized that "previous inequalities have amplified the negative impact of the pandemic and, at the same time, covid-19 has aggravated inequalities", which causes "a vicious circle of inequality that could lead to social and social bankruptcy. politics".

In their economic projections for the next six months, presented this Tuesday, the Fund's experts point out the risk of riots and social protests by the layers hardest hit by the virus, sometimes also affected by the impact of natural disasters.

The

IMF's

Fiscal Surveillance

report

, presented this Wednesday, highlights that the enormous fiscal support deployed by the authorities has prevented more serious recessions and greater job losses.

However, he warns that the deficit and public debt have soared to unprecedented levels.

In general, the average deficit with respect to GDP in 2020 reached 11.7% in 2020 in advanced economies, 9.8% for emerging countries and 5.5% for low-income countries.

Source: elparis

All business articles on 2021-04-07

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