The chief economist of the European Central Bank wants to avoid widening public deficits.

To finance aid for the poorest in the face of inflation, Philip Lane suggests instead taxing high incomes or corporate superprofits.

For both macroeconomic and equity reasons as the energy shock hits people through record inflation, “governments should support the incomes and consumption of households and businesses that suffer the most,” said Philip Lane in an interview with the Austrian daily

Der Standard

published on Tuesday.

“The big question is whether some of this support should be funded by tax hikes for the wealthy,” he continues.

These “very profitable” companies

His answer: "It could take the form of higher taxes on high incomes or on industries and companies that are very profitable despite the energy shock" like Total, which posted record profits, believes this influential council member. 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 again on Monday before the European Parliament.

Similarly, "if you support those in need by raising taxes, this has less effect on inflation than if you increase deficits", justifies Philip Lane.

Temporary and exceptional tax

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 has not gone 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 solution on a European scale.

Leaving the European Union, the United Kingdom announced last Friday a plan of spending and massive tax cuts financed by debt in the face of inflation at a level not seen in decades, which fueled the fall pound record.

Policy

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World

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  • Economy

  • ECB

  • Inflation

  • Taxes

  • Christine Lagarde