Corona crisis winners: who will pay for the pandemic?

By Efthymis Angeloudis, Silvio Duwe, Chris Humbs, Marcus Weller,
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The government’s plan is that the cost of the pandemic will be financed through debt. The financial policy spokeswoman for the Greens in the German Bundestag, Lisa Paus, is therefore calling for additional taxation of companies that made particularly high profits during the Corona crisis.

The concept of such an excess profit tax provides for the taxation of special profit gains that have arisen due to a crisis situation. This could affect a company like Amazon. The mail order company benefited from the closure of the stationary retail business and increased its sales by around 33 percent to 29.5 billion dollars last year. The state could use this income to refinance debts that arose through emergency aid, short-time work benefits and bridging allowances. “I think it is right and important that those who have benefited particularly from this crisis also make their additional contribution,” said Paus. This is not only important for reasons of justice. Even after the crisis, these corporations would have a competitive advantage.

Paus receives support for this proposal from the left wing’s financial policy spokesman in the Bundestag, Fabio de Masi. In an interview with the ARD-Politikmagazin Contrast He explained that he could imagine siphoning off profits from corporations like Amazon, which are mainly involved in the Corona crisis, by means of an excess profit tax.

“Corona solos” is controversial

An excess profit tax or a “corona solos” can be easily implemented, says Christoph Trautvetter, head of the Tax Justice Network. At the same time, the network points out that such a special tax can only be part of a more comprehensive corporate tax reform. Because the biggest winners from the crisis are international corporations that are already calculating their profits with the help of complicated company structures and tax havens and thus reducing their taxes.

Objections come from the other parties represented in the Bundestag. The CDU / CSU and SPD as well as the FDP currently see no need for additional taxes in order to cope with the costs of the crisis. They are betting that the corona debt can be financed through future economic growth.

Economists warn against relying on growth alone. “We have a lot of catching up to do with infrastructure, digitization and climate protection,” warns Stefan Bach, who is responsible for taxes and public finances at the German Institute for Economic Research. “And of course none of this goes together if you want to forego tax increases at the same time.” In addition, it is by no means certain that economic growth after the pandemic will continue as it did after the financial crisis in 2009.

Demand for dividend lockdown

Gerhard Schick, chairman of the citizens’ movement Finanzwende and former member of the Bundestag for the Greens, remembers Contrasts because of the fact that taxpayers had to pay for the bank bailout as early as the 2009 financial crisis. He sees parallels to the Corona crisis. When large companies are rescued with taxpayers’ money, not only the employees benefit, but also the shareholders in particular. Schick therefore calls for a “dividend lockdown” for companies that have benefited from short-time work benefits. Otherwise there would be the imbalance that at the end of the crisis year 2020 the employees would have a minus due to short-time work, while the shareholders made profits.

One example of this is the automotive group Daimler. This saved 700 million euros in 2020 through short-time work benefits. At the same time, the group was able to increase its annual profit by almost 50 percent. The Daimler Group is also planning to increase the dividend for its shareholders by 400 million euros to a total of 1.4 billion euros. The major shareholders, above all the Kuwait sovereign wealth fund, Renault-Nissan and the Chinese investor Li Shufu, would benefit from this.