WASHINGTON- The International Monetary Fund said on Thursday advanced economies could use more progressive income tax, inheritance and property taxes and taxes on excess corporate profits to help reduce inequalities exposed by the COVID 19 pandemic.
The IMF Fiscal Monitor said the pandemic had exacerbated pre-existing inequalities in access to health care, education and digital infrastructure, which could cause income gaps to persist generation after generation.
Most countries would need additional revenues to ensure access to the COVID 19 vaccines and improve services, while interrupting a vicious cycle of mutually reinforcing inequalities, it said.
To change course, countries should focus on stronger education, health and early childhood development and in order to increase social safety nets, it said.
To accumulate the necessary resources, advanced economies could boost income taxation and increase reliance on inheritance gift taxes and property taxation, said the IMF.
Specifically, COVID -19 tax on recovery and excess' corporate profits could be considered, it said, adding that wealth taxes were another option if other measures did not suffice.
The emerging markets and developing economies should focus on strengthening social spending to fund more tax capacity, it said.
Oxfam welcomed the IMF's backing for taxing excess corporate profits and upper income levels and urged the IMF to back away from its own austerity requirements.
The pandemic has intensified inequalities, said Susana Ruiz, the international leader of tax policy from the non-profit group, noting that billionaires' wealth globally increased between March and December 2020 by a staggering$ 3.9 trillion.
She said the IMF and governments should avoid repeating what happened after the financial crisis of 2008 -- 2009 when the burden of taxation moved away from the richest and corporate profits to households.
Unless the IMF takes its own advice on taxing the rich to reduce the gap between rich and poor, inequalities will continue to increase, and we wo n't be able to build back better, Ruiz said.