The chief economist of the European Central Bank (ECB), Philip Lane, suggests this Tuesday, September 27, 2022 to tax high incomes or superprofits of companies, to finance aid to the most disadvantaged in the face of inflation, thus avoiding increase public deficits.
Support for households and businesses
For both macroeconomic and equity reasons, as the energy shock affects people through record inflation, “ governments should support the incomes and consumption of households and businesses that suffer the most,” said the chief economist in an interview with the Austrian daily the standard released on Tuesday.
“The big question is whether some of this support should be funded by tax hikes for the wealthy,” he continues.
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His answer : “This might take the form of higher taxes on high earners or on industries and businesses that are highly profitable despite the energy shock,” believes this influential member of the board of governors of the monetary institute.
The ECB advocates targeted state aid to protect households from the impact of inflation, as its president, Christine Lagarde, said once more on Monday before the European Parliament.
Likewise, “if you support those in need by raising taxes, it has less effect on inflation than if you increase deficits”, justifies Philip Lane.
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An idea that is gaining ground
The idea of taxing the wealthiest is already gaining ground in the euro zone, where the Spanish government wants to introduce a temporary and exceptional tax for the richest 1% of the population, in order to finance the measures put in place to mitigate the impact of soaring inflation.
France didn’t go that far : the finance bill for 2023 relies on the tariff shield to contain the rise in prices. Divided on the question of a tax on « superprofits », the government hopes to find a European-wide solution.