COVID-19 has already infected variant people and claimed nearly half 1,000,000 lives. The sudden halts in economic activity and employment are far worse than anything on record, comprehensive and speed.
The economies of developing countries are being harmed by drastic but very necessary measures to safeguard people’s health, and by cross-border disruptions in supply chains, tourism, remittances and commodity prices.
The poorest and most vulnerable segments of the population are always affected disproportionally during economic downturns. this can be compounded during the present crisis because the poor have fewer options to safeguard their health and suffer more from disruptions to public services.
Recovery won’t be quick, and therefore the future will differ in important ways from the fact only some months ago. In times of distress, uncertainty and panic, people look to governments for information, direction and protection.
The current crisis could be a global challenge that needs a worldwide response. International tax cooperation must be part and parcel of a collection of effective and well-coordinated multilateral actions to reply to the crisis.
As to expand the fiscal space, it’s more urgent than ever to figure together to fight nonpayment and tax avoidance, including illicit financial flows. At the identical time, it’s never been more important to manoeuvre towards fairer and more equitable taxation of economic activities at the worldwide level.
Taxation is profoundly stricken by the pandemic. Covid-19 will change taxation— in a minimum of three important ways, with lasting implications. First and most immediately, taxation plays a task at this current crisis stage in helping to sustain universal access to basic goods and services through “lifeline” measures.
Vulnerability to COVID-19 and to its economic impact is very different across social groups in different communities. It has impacted severely every sector. Taxation can help catch up on this uneven playing field—that is a further argument for progressive taxation. within the same spirit, aggressive tax avoidance by large taxpayers – however legal it’s going to appear – will become even more intolerable to society at large.
This increases the importance of, and a focus on, the work on international corporate taxation now being carried on within the Inclusive Framework and also the UN Tax Committee.
Second, because the economies of the globe recover, taxation also will play a task. Developing countries are likely to work out a big decline in their average tax-to-GDP ratio in 2020. this can have lasting implications—after the 2008-09 global financial crisis, it took a median of eight years for revenues to recover to their pre-crisis level.
Clearly, those countries with limited fiscal space going into the crisis are hit harder than those who had greater flexibility on both the fiscal and monetary sides. Much direct international backing and debt relief are going to be necessary during and after the height of the crisis, and indeed considerable emergency financing is already flowing from both the World Bank and therefore the IMF.
Finally, the crisis brings even more importance to the basic work already being carried on by many lower-income countries, to reform and build governance capacity as a part of the event process. Transparency, including the monitoring of domestic revenues, aid, and also the spending of both, is critical.
For this group of states substantial efforts to create tax capacity are central to a development strategy aimed toward delivering on the Sustainable Development Goals.
COVID-19 opens more opportunities and potentiality for moving more decisively toward sustainable and inclusive growth. Progress and prosperity receptive to all peoples and nations is a perfect well worth pursuing.