Tuesday, May 18

IMF urges passing a temporary ‘Covid rate’ to tax the rich more




The International Monetary Fund (IMF) identifies Spain as one of the countries where the public deficit has increased the most in its latest fiscal monitoring report that it has just published. “Several countries are expected to have higher cyclically adjusted primary deficits compared to pre-Covid-19 levels (Belgium, Denmark, Italy, Korea, Netherlands, Spain), of which some would benefit from expenditure and / or income reforms (Belgium, France, Italy) », He points out.

The IMF predicts that this year the public deficit in our country closes at 9% of GDP, that is not until 2022 that it falls to 5.8% and then it will be reduced to 4.9% in 2023 and 4.3% in which it would remain stagnant until 2026. The public deficit worldwide was 11.7 % of GDP in 2020 on average and will be, according to the IMF, 7.7% in 2021, below that of Spain, although the institution detects that adjustment plans will be implemented more quickly than was initially forecast.

The IMF recommends incorporating a higher taxation of wealth in general, with Wealth Taxes like the Spanish one, and warns that countries that are taxing wealth the most are growing. The IMF detects that the inequality of wealth is greater than that of income in the top level of countries and recommends taxes on fortunes and inheritances, since in addition to reducing inequality, they “increase the probability of intergenerational mobility.”

He even throws up the idea of ​​a ‘Covid rate’ to the richest. “To help meet funding needs related to the pandemic, policy makers could consider a temporary recovery contribution from Covid-19, which weighs on higher incomes and wealth,” he recommends. He has also claimed to tax more the ‘extra’ profits obtained during the pandemic by multinationals in certain sectors.

Record public debt

Likewise, without incorporating the 35,000 million from Sareb -which placed public liabilities at 120% of GDP compared to 117% previously-, the IMF estimates that public debt will close this year at 118.4% and believes that it will stagnate at 117% in the next five years, with 117.3% in 2022 and 2023, 116.8% in 2024 to rise again to 117.7% in 2025 and end 2026 at 118.4%. When you include Sareb, these numbers will be higher.

The agency notes that global public debt will set a record this year at 99% of GDP, being 121% in the case of advanced economies, 17 points more than before the pandemic. In this sense, for the Eurozone it estimates 92%. Likewise, as is the case in our country, France, Japan or the United States have extended the aid programs approved during the pandemic, such as ERTEs or ICO loans.

The pandemic triggers inequality

The institution also warns of increase in inequality in the crisis all over the world but, specifically, in our country. “High-frequency data confirms the great effect of the pandemic on poverty and inequality and the role of government support in mitigating its impact. In Spain, according to Aspachs and others (2020), income inequality measured by the Gini index before public transfers increased by 38.4 points – with 100 being the highest inequality in which an individual receives all income and 0, the greater equality possible – in February 2020 to 49.2 in December 2020, according to data from commercial bank accounts, while Cantó Sánchez et al. (2021) found that fiscal measures had helped cushion the immediate impact on lost income », Highlights the organism.

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