The International Monetary Fund (IMF) said on Thursday that advanced economies could use progressive income taxes of the rich, including inheritance, property and excessive corporate earnings taxes to help reduce inequality caused by the coronavirus pandemic.
The IMF said that in order to mobilize the necessary resources, advanced economies could increase progressive taxes on income and strengthen reliance on inheritance and property taxes, adding that "wealth taxation" is another option if other measures are not sufficient.
"The pandemic has deepened inequalities," said Susana Ruiz, Oxfam tax policy leader, noting that billionaire wealth increased globally by $3.9 trillion between March-December 2020.
Ruiz said the IMF and governments should avoid a repeat of what happened after the 2008-2009 financial crisis, when the burden of taxes shifted away from corporate and wealthier profits to households.
"Unless the International Monetary Fund takes its own advice on taxing the rich to narrow the gap between the rich and the poor, the disparities will continue to grow, and we will not be able to rebuild better," Ruiz concluded.
The fund pointed out the pandemic worsened pre-existing inequalities in access to healthcare, education and digital infrastructure, potentially causing income gaps to persist. The fund said that most countries will need additional revenue to ensure access to vaccines and improve services, while cutting the "vicious circle" of inequality.
IMF advised countries to focus on improving investment in education, health and early childhood development, and strengthening social safety nets.
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