The pandemic has exacerbated inequalities in the economy, opening a rift between workers and businesses that have faced or thrived, such as web operators, and those who have suffered disproportionately, including the hospitality industry and a large portion of non-food retail.
The trend is particularly apparent in Ireland, which has relied on the lockdown tactic that divides socially and economically more than any other European country.
The International Monetary Fund on Wednesday proposed that to tackle this inequality, countries should consider raising taxes on businesses and workers who do well to show “solidarity” with those who have suffered. In his biannual budget review, he said this should be done to strengthen social cohesion even if national finances are not too strained.
It’s an interesting idea and one that this country should not immediately dismiss, at least not for business. The IMF has suggested raising the maximum rate of income tax, but in Ireland the entry level for this rate is below € 40,000 – lower than in other European countries and too low to increase the rate. rate. But it is possible to operate certain types of businesses.
Once the distortions of multinationals are eliminated, Ireland’s national debt as a proportion of its national economy is around 108 percent, one of the highest in Europe. Delivering quarterly Treasury figures this week, Finance Minister Paschal Donohoe said he would choose the “right time” to begin fiscal consolidation once the threat of the pandemic begins to subside.
If he embraces the IMF idea, he could get a little head start while creating political cover to protect his government’s left flank.
Ireland is home to the European operations of many of the world’s largest web companies, such as Amazon, Facebook and Google, which have benefited disproportionately from the pandemic. They could complain little if Donohoe hit them with a temporary windfall tax, and he would have the perfect excuse.
Grocery sales are also 20% above normal levels, a direct result of the state’s lockdown measures, which have shut down the hospitality industry. It’s a classic godsend. Aldi, Lidl, Dunnes Stores and Tesco could hardly complain if they were asked to contribute more for a while. Every little bit counts, as one of these retailers constantly reminds us.