The IMF urges governments to consider new wealth taxes to raise funds during Covid-19
- The IMF says countries should consider implementing wealth taxes to raise revenue during the pandemic in a recently released policy paper.
- In recent years, the IMF has shifted its focus and recommended policies aimed at reducing inequality.
- Sens. Warren and Sanders helped popularise the wealth tax during their progressive presidential campaigns.
- For more stories go to www.BusinessInsider.co.za.
The International Monetary Fund is pushing governments around the world to consider implementing wealth taxes to raise revenue as the pandemic slams economies.
In a "Tax Issues" policy paper released earlier this month, the IMF said policymakers should review ramping up income, property, and wealth taxes, modeled as a "solidarity surcharge," the organisation said.
For individuals, the IMF encouraged slashing payroll taxes as well as cash transfers to help those hardest hit with job losses or other circumstances.
The IMF's recommendation for a wealth tax marks a stark turnaround for an institution that long pushed tax cuts as a central element of its policy menu for developing nations. It serves as a lender of last resort to countries in dire financial straits.
The Guardian reported that evidence of lackluster growth in recent years compelled the IMF to shift gears and begin proposing plans to help reduce the gap between the richest people and everyone else.
IMF Managing Director Kristalina Georgieva said in a blog post earlier this year: "Inequality of opportunity. Inequality across generations. Inequality between women and men. And, of course, inequality of income and wealth. They are all present in our societies and - unfortunately - in many countries they are growing."
In the US, Democratic Senators Elizabeth Warren and Bernie Sanders helped thrust wealth taxes into the mainstream with their unabashedly progressive presidential campaigns.
Both wanted to use wealth taxes as a mechanism to rein in runaway inequality and shrink billionaires' fortunes to finance sweeping proposals for universal healthcare and elimination of student debt.
Some variation of those taxes on the richest earners in the US could ostensibly be used to cover federal spending during the pandemic.
The IMF projected last week that the pandemic could lead to an economic meltdown that rivals the Great Depression. It said that global gross domestic product would drop around 3% this year, and could fall lower if the outbreak isn't contained.
Georgieva said on Monday that the organisation may need to propose "exceptional measures" to help nations alleviate the economic effects of the pandemic.
Receive a daily update on your cellphone with all our latest news: click here.
Get the best of our site emailed to you daily: click here.
Also from Business Insider South Africa:
- Spur restaurants will not be opening when hard lockdown ends for fear of ‘catastrophic losses’
- Unemployed will get R2,100 each in Covid-19 payouts over 6 months, children R2,800 extra
- The end to those nasty R99 debit orders has just been delayed by a year because of Covid-19
- Millions of jobless South Africans will now get a corona grant – what you need to know
- Santam to refund 20% of car premiums in April
- A third of SA tenants haven’t paid their full rent this month – and May could look much worse