IMF proposes a temporary Covid ‘wealth tax’ as a means of stimulating economic recovery.
In a move that could have a serious impact on Spanish and expat business owners, not to mention entrepreneurs across the globe, the International Monetary Fund (IMF) has announced that it is considering imposing a surcharge on companies and individuals in the higher income bracket as a means of generating the tax income needed to address increased public spending during the coronavirus pandemic. The temporary levy would also see an increase in taxes on wealth and inheritance.
“To help meet pandemic-related funding needs, policymakers could consider a temporary recovery contribution from Covid-19, which weighs on higher income and wealth,” the IMF announced in the latest edition of its report ‘Fiscal Monitor’. The Fund pointed out that these kinds of temporary taxation measures on the wealthy, far from being unusual, have been implemented in emergency situations in the past, such as during the reunification of Germany and in Australia as recently as 2011.
The IMF has suggested that taxing those businesses which have prospered during the pandemic, such as pharmaceutical companies, would greatly contribute to economic recovery without negatively impacting on those who are struggling the most financially. The deputy director of the IMF’s Fiscal Affairs Department, Paulo Mauro, highlighted the need for additional funds to cover spending in health and education, but added that each country would need to take its own approach.
“In emerging and low-income economies, the priority will be to improve tax administration and collect more consumption taxes, while in advanced economies we see an erosion of corporate tax revenue and we also see an erosion in tax collection income of the people in the highest part of the wealth scale,” he explained. He suggested several options, including introducing additional corporate and income taxes, so that the wealthy can make “a contribution to the recovery of Covid-19 that could take the form of a supplement to income tax or corporate tax given that some companies have done very well in terms of their market valuation and there would be an opportunity.”
Source: El Mundo