IMF Says Wealth Tax, Corporate Taxes Can Help Virus Recovery

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Taxes on high-income earners and corporations can help advanced economies raise revenues to recover from the global pandemic, the International Monetary Fund said.

Rebuilding from Covid-19 offers an opportunity to reverse the erosion in personal-income taxes paid by the highest earners, Vitor Gaspar, the director of the IMF fiscal affairs department, told reporters on Wednesday.

“One specific option that is available to policy makers would be a Covid-19 recovery contribution that could take the form of a surcharge on personal-income tax or a surcharge on corporate-income taxes given that some corporates have done very well in terms of stock-market valuation,” Gaspar said. “There is an opportunity there, and that’s one of the options that is on the table.”

The world faces significant economic challenges in the Covid-19 recovery, with the fund estimating that 95 million people fell into extreme poverty in 2020. It has also warned about widening inequality and a divergence between advanced and lesser-developed economies.

The IMF also has been calling for a minimum global corporate income-tax rate as a way “to interrupt the race to the bottom in corporate-income taxation,” Gaspar said. It’s important to ensure that governments have the resources needed for their spending priorities, and a minimum rate “is something that we believe can be extremely important for the financing of the developing countries,” he said.

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