How can Spain follow proposed IMF government tax?

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IMF government tax - can Spain achieve it?

The IMF believes companies which benefited from the corona pandemic, and other wealthy companies and individuals, should pay more tax to offset the costs of the current crisis.

The IMF, along with other international organisations, believes national governments must intervene to reduce income inequality and face the economic crisis. Since the 1980s, income inequality has widened, while tax policies have become less progressive. The IMF proposes a number of measures to enable countries to counter the growing wealth gap. 

 Temporary covid tax 

The costs of the corona pandemic could be offset with a temporary tax increase for the very rich. The IMF is particularly targeting companies which benefited from the pandemic, such as the pharmaceutical and technology industries. An increase in corporate tax for multinationals should also generate a lot of money for European countries.

In addition, the tax rate must be raised for the highest incomes. This is a difficult measure for Spain. Recently, the Spanish government increased the tax rate for annual incomes from €300,000 to 47%. With that, Spain now occupies an average position. In countries such as the Netherlands, Belgium, Sweden, Denmark and Austria, this percentage is well above 50%. 

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Tax Deductions 

The Spanish Independent Authority for Fiscal Responsibility (AIReF) has analysed some of these tax benefits and concluded they mainly benefit higher-income households. This must be adjusted so that not the higher, but the lower incomes can benefit.  

Income from capital 

Because tax on property income mainly affects the rich, according to the IMF there should be more focus on this. The Spanish government has now shown its willingness to increase the tax rate on this income and bring it closer to the tax rate on labour income. Currently, there is still a rate of 26% on income from capital of €200,000. This equates to just over half the income tax rate. 


Both the IMF and the European Commission have repeatedly asked Spain to review its VAT policy. They refer to the low VAT rates for goods and services that are mainly purchased by households with average or higher incomes. The AIReF also investigated this, because Spain collects an average of €12billion less VAT annually than other European countries.  

Wealth tax 

Not all countries have a wealth tax – an effective redistribution mechanism according to the IMF. In the Netherlands, wealth tax has been included in income tax since the tax reform in 2001. Spain, like countries such as Norway and Iceland, has a wealth tax and can thus contribute to reducing the wealth gap. 

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