The International Monetary Fund proposes to introduce a temporary tax that would apply to companies and the richest who “earned excess” during the pandemic in 2020. In this way, these entities would show “solidarity with those hit hardest”.
A tax for wealthy companies as part of a pandemic solidarity
New tax as he describes “Financial Times“, would help reduce the economic inequalities in the world that have highlighted during the pandemic. According to the IMF, such a tax could also reassure countries more affected by COVID-19 that fighting the pandemic is a “collective effort”.
The head of the IMF for fiscal affairs, Vitor Gaspar, emphasized in an interview with “FT” that it is about “symbolic tax increase for those who have prospered over the past year”. In his opinion, such a move would strengthen social cohesion, and in the perception of citizens it would show that “everyone puts into the effort necessary to rebound after COVID-19”.
The fund also stresses that it is younger and poorer people who suffer the most from the pandemic and face a higher risk of losing their jobs. The IMF therefore believes that developed economies should raise the highest income tax thresholds for a short time, following the example of the German solidarity tax.
The IMF also points out that states should consider a special “excess income” tax for companies that showed unprecedented profits in 2020. According to Gaspar, the symbolic dimension of such taxes is very important, especially in times when social solidarity plays an important role.
As emphasized by FT, the IMF is calling for such taxation, as most countries are currently not threatened by a public finance crisis, and debt levels of developed countries are expected to stabilize after the pandemic.
The IMF’s proposal should not be confused with the so-called “solidarity levy”, paid by the richest Poles – people with income over PLN 1 million per year. This tribute it was implemented before the pandemic, for the first time the richest had to pay it in 2019.
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