The IMF said higher earners and companies that had succeeded in the coronavirus crisis should pay extra taxes to show solidarity with those most affected by the epidemic.
A temporary tax hike as a result of last year’s economic and health crisis will help reduce social inequality, the fund said in its bi-annual financial monitoring on Wednesday. It will reassure even the worst affected that the fight against Covid-19 is a concerted effort within society.
Vittor Gaspar, head of the IMF’s finance department, told the Financial Times that the symbolic rise in tax collection from those who have improved over the past year will strengthen social cohesion, even if it does not require pressure to repair public finances.
Countries should consider this policy because it will help raise the awareness of their citizens that “everyone will contribute to the necessary efforts to recover from Covid-19”, he said.
The IMF noted an increase in inequality during the epidemic because young and poor people were the most affected, with the highest risk of losing their jobs and incomes.
Developed economies with strong tax systems should raise their top income tax rates for a period of time, the IMF said, citing Germany’s consolidated tax after reunification as an example.
An additional profit margin should also be considered for companies that earn unusually high in 2020, the fund said.
“The symbolic impact of such contributions is sometimes very significant. . These usually occur in very exceptional situations where social cohesion plays a particularly strong role, ”Gasper said.
The IMF’s call comes despite the fact that most countries do not face a crisis in their government funding. The fund’s forecast says debt levels in developed economies are likely to stagnate as countries fight the virus and grow faster.
Last year’s heavy last of countries contributed to much better economic outcomes, the IMF said; Developed economies accounted for 11.7 per cent of national income, emerging countries 9.8 per cent and low-income countries 5.5 per cent.
Low interest rates have helped soften the fiscal deficit in this advanced economy and the IMF expects the burden of public debt in these rich countries to stabilize by the middle of the decade.
Despite the combined spending of তার 2.8 billion by the administrations of both Donald Trump and Joe Biden since the IMF’s last fiscal forecast in October, it has revised its estimates of the future of the U.S. economy.
But the world’s poorest countries will find it “challenging” to spend money on their debts, the IMF said, from countries that can freely grow and recover quickly from the epidemic and those that cannot easily get vaccinated or support social distance. Will recover more quickly.
“It is important to emphasize the multi-speed character of recovery and to formulate policies to fit the specific situation in each country,” Gasper said.
He called on countries to invest in the production and distribution of the COVID-19 vaccine, saying it should implement the most important immediate monetary policy. The IMF estimates that it will cost billions of dollars, but that developed countries should increase their growth enough to raise tax revenues by just লার 1 by 2025.
“Vaccination will probably be considered a global investment project that will be considered the highest return so far,” Gasper said.