International Monetary Fund: solidarity tax to mitigate inequalities

The International Monetary Fund (an international public organization of a universal nature, which today includes 190 countries) proposes an idea that would have the objective of supporting the economic crisis caused by Covid, that is, a solidarity tax to finance expenses. The IMF, in its Fiscal Monitor, asks political authorities to consider a temporary contribution to the recovery from the pandemic imposed on high incomes or large assets. The tax would involve a reform of domestic and international taxation, especially when it starts to occur a concrete economic recovery. This measure would be only temporary and should burden the highest incomes or large assets, but nothing is yet certain.

There is no doubt, in fact, that in recent months the pandemic has carved a very deep furrow in the world economy. The World Bank estimates that the Covid-19 pandemic caused one of the worst economic recessions since 1870, generating a dramatic rise in poverty levels. Therefore, the governments of the various countries have been forced to approve large measures to support the income of families and businesses, without being able to remedy the increase in unemployment and the contractions of the markets.

The cumulative loss for the world economy, considering the growth forecasts if there were no pandemics, amounts to 11 trillion dollars in the two-year period 2020-21 and will reach 28 trillion in the 2020-25 period.

According to the International Monetary Fund, nearly 90 million people would risk falling below the extreme deprivation threshold this year, frustrating the attempts made in recent years to reduce inequality and poverty.

Meanwhile, low interest rates are making it possible to keep public finances under control. However, world public debt rose to a record 97% of GDP in 2020, and the figure is estimated to continue to increase to 99% of GDP by the end of 2021. Furthermore, while in 2019 international trade was increased by 1.1%, various international institutes expect a reduction of around 11 percentage points for 2020.

IMF Director of Tax Affairs Vitor Gaspar says the best investment at the moment is in vaccines. The campaign should therefore be accelerated in order to get substantial health, social, economic and financial benefits, thus emerging from the economic crisis.

Attempts are being made to reduce inequalities, the even deeper gap between some companies that have accumulated enormous profits and young people, women and less skilled workers, who have lost their jobs, have had to give up their jobs or have worked much less because of the lockdowns.

The Washington Institute says that if the pandemic can be kept under control with vaccinations, there will be a strengthening of economic growth, with more than $ 1 trillion in additional revenue to advanced economies between now and 2025.

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