The IMF proposes to raise taxes on companies with more profits during the pandemic
IMF Managing Director Kristalina Georgieva. /
The agency establishes that the impact of the covid has been very different between the sectors and that those that had "extraordinary benefits" must contribute more to fiscal consolidation after the outbreak of the war
Those who have come out better from the pandemic will have to help more in the economic recovery after the war in Ukraine. That is the thesis that the International Monetary Fund (IMF) exposes in a report in which it defends “temporary increases in Corporation Tax to capture the extraordinary benefits generated by the pandemic.”
In one of the chapters of the study 'World Economic Outlook' released before the official start of the meeting of the IMF and the World Bank in Washington, the organization assures that the objective of this measure is to maintain fiscal consolidation after the enormous public spending due to the pandemic precisely now that the outbreak of the war will mean further increasing this aid to certain more vulnerable companies and families.
The institution chaired by Kristalina Georigieva assures that the pandemic has had an impact that has "dramatically varied" according to the different sectors of activity. Among the most benefited have been, for example, the semiconductor, information technology, pharmaceutical, biotechnology, equipment and health services sectors, notes the IMF, which establishes that the most damaged by covid-19 were the sectors of the hospitality, tourism and entertainment.
In this way, the agency leaves electricity companies and banks off the list, for which it recognizes that they have suffered a drop in their profit margins due to the low interest rate policy of the European Central Bank (ECB) to combat the impact of the pandemic.
Taxes to finance “new priorities”
It is a measure that is especially convenient for countries where "fiscal space is limited", such as the case of Spain with a very high public debt and deficit as a result of the pandemic, and obtain income through taxes on these large companies can help 'finance new priorities', says the report. The IMF speaks of this as one of the best ways to "modernize corporate taxation" and increase compliance with their tax obligations.
In addition, it recommends that the governments "calibrate the pace of their fiscal consolidation", so that the most recovered economies begin "faster" to reduce aid, but the most vulnerable do not do so because it can pose "long-term problems". ». In this way, the IMF considers that government aid to the companies most affected by the pandemic should be limited to circumstances where there has been a "break in the market" but warns that these sectors must be closely monitored and bet on their " restructuring or reconversion» so that they do not drag down the rest of the economy.
