IMF calls for higher taxes on the wealthy

13 Ottobre, 2017, 17:44 | Autore: Doriano Lui
  • IMF Managing Director Christine Lagarde and World Bank President Jim Yong Kim at the IMF and World Bank semi-annual meeting. This October's meeting coincides with the OECD's optimistic projection for the world's economy

The International Monetary Fund (IMF) raised Argentina's growth forecasts for 2017 and 2018 in the new report on the country's economy by Alejandro Werner, IMF's Western Hemisphere Department director.

Last year the global economy grew a disappointing 3.2 percent, but the world is on track for 3.6 percent growth this year and 3.7 percent next year, according to the IMF.

The IMF however downgraded its growth projection for the sub-Saharan Africa economy to 2.6 per cent for 2017 and 3.4 per cent for 2018, from 2.7 per cent and 3.5 per cent respectively projected in July.

In an analysis certain to be seized on by Labour as backing for its tax strategy, the IMF used its influential half-yearly fiscal monitor to attack the rationale for the reductions in tax for the highest earners in recent decades.

It described the medium-term growth outlook as "highly uncertain" and said that it depended at least in part on the UK's future economic relationship with the EU, and the extent of the increase in barriers to trade, migration, and cross-border financial activity.

"...there are going to be different complaints - some legitimate, some manufactured", the Minister said, adding that the government needs to have capacity to distinguish between a genuine and a manufactured complaint.

The Fund acknowledges an inequality-dampening tax code "could be difficult to implement politically, because better-off individuals tend to have more political influence, for example, through lobbying, access to media, and greater political engagement".

New Zealand's top tax rate peaked at 90 percent in the 1940s, and was as high as 67 percent until 1988.

But India, along with China, will remain the growth drivers for emerging and developing economies.

Some degree of inequality is inevitable in a market economy, the report acknowledges, as result of differences in talent, effort and luck. China, Europe and Japan are buying more goods from around the world, including the United States. "Notably, we expect sub-Saharan Africa, where growth in per capita incomes has on average stalled for the past two years, to improve overall in 2018".

The International Monetary Fund is dialing back its expectations for the U.S. economy, according to a report out Tuesday. But India's gross domestic product growth decelerated to 5.7% in the April-June quarter.

The IMF said Israeli consumer prices would climb 0.2% this year after falling 0.5% in 2016. The report says income inequality has decreased if you take the entire global population, owing to strong income growth in some large emerging economies.