IMF says rich countries could use income taxes to reduce inequalities

Most countries would need additional income to ensure access to Covid-19 vaccines and improve services, while breaking a “vicious cycle” of mutually reinforcing inequalities, he said.

To change course, countries must focus on better investment in early childhood education, health and development, and strengthening social safety nets, he said.

To mobilize the necessary resources, advanced economies could increase income tax escalation and increase the use of inheritance / gift and property taxes, the IMF said.

“Contributions to the recovery of Covid-19 and taxes on ‘surplus’ corporate profits could be considered,” he said, adding that wealth taxes are another option if other measures are not not sufficient.

Emerging countries and developing economies should focus on building fiscal capacity to finance more social spending, he said.

Oxfam hailed the IMF’s support for taxing excess corporate profits and top incomes, and urged the IMF to move away from its own austerity demands.

“The pandemic has worsened inequalities”, said Susana Ruiz, head of international tax policy for the nonprofit group, noting that the wealth of billionaires has increased in the world of “a staggering $ 3.9 trillion between March and December 2020.”

He said the IMF and governments should avoid repeating what happened after the 2008-2009 financial crisis, when the tax burden shifted from the profits of the wealthiest companies to households.

“Unless the IMF follows its own advice on taxing the rich to reduce the gap between rich and poor, inequalities will continue to grow and we will not be able to build better.” Ruiz said.