Tax

[New] The Commission is again looking at the idea of establishing a Digital Services Tax as a means to chart its recovery from the coronavirus crisis, which it believes could generate up to €1.3 billion per year for the EU budget.
Taxing individuals with fortunes over $1 million (£785,000) to pay between 2 to 3.5% tax depending on their net wealth in 2020, would allow Latin American governments to raise up to $14.2 billion (£11.6bn) in tax revenue, which could be spent on healthcare and social safety nets.
Continuing with the Digital Tax, French President Emmanuel Macron told French TV that he envisages an EU-wide digital tax on big tech multinationals, along the lines of a digital tax, which France plans to impose in 2020.
If policies including the UK's plastic tax in 2022 are implemented well, that would drive £10 billion' worth of new recycling facilities in the UK by 2030.
Tax revenues are expected to further decline in FY2020 - 2021 due to the reduction in a number of taxes to stimulate economic activity, support tourism, restore consumer and business confidence and revive domestic demand.
Canada's government has implemented or proposed a number of policies, from carbon taxes to regulations, to hit its target: a cut in greenhouse gas emissions by 30% by 2030.
Other Chinese automakers are counting on support from the government, too, including tax breaks and an extension to 2022 of subsidies, originally scheduled to end this year, to make EVs more affordable.
The combination of economic contraction, large government welfare payments and falling tax revenues, will see UK national debt rise very significantly.
A key action would be adopting a federal standard to reach 55% carbon-free electricity by 2025, 75% by 2030, 90% by 2035 and 100% by 2045, as well as extending investment and production tax credits for clean energy resources and tying them to battery storage as well.
Even if employment rebounds by the end of this year and payroll taxes return to near-normal levels, the shock from the pandemic shutdown could accelerate the depletion of the Social Security trust fund by about six months..
Governments are adopting measures to drive increased use of recycled content, including the Government of the United Kingdom's tax on plastic packaging that contains less than 30% recycled content, which will be introduced in 2022.
US tax revenues are expected to fall $34 billion short of pre-COVID - 19 forecasts in fiscal year 2020 and $80 billion short in fiscal year 2021.
The UK could generate around £15bn a year over the next decade - equating to roughly three-quarters of annual public spending on adult social care - by promoting new carbon taxes.
The State of New York anticipates the loss of tax revenue from Covid-19 to be in the area of $7.4 Billion dollars, of which loss of vehicle related revenues must figure.
Germany's coalition Government agreed a new bigger than expected fiscal stimulus of €130bn (nearly 4% of German GDP and 1% of Eurozone GDP) focussed on increased spending and tax cuts.
The worst economic contraction is expected to be in Brazil, where GDP is now seen at -8.0% this year but recovering to 2.2% growth in 2021 as it restarts its tax and business reforms.
The EU's post pandemic recovery plan could include a digital services tax: A digital tax applied on companies with a turnover above EUR 750 million could generate up to EUR 1.3 billion per year for the EU budget.
The German finance ministry has lowered its forecast for tax revenues in 2020 by almost €100bn (3% of GDP) compared to its previous estimate in October 2019: Tax revenues in 2021 are expected to be €50bn lower and a shortfall of 1.2% of GDP persists until the end of the forecast in 2024.
US states and cities (that generally must balance their budgets each year) already have begun revising their spending downward: Cities, towns, and villages could lose $360 billion in tax revenue over the next two years.
The implied generation cost for a 55 pc-efficient gas-fired power plant in Japan, including environmental fuel tax, could drop to less $ 37/MWh in the fourth quarter of this year, from around $ 63/MWh now, based on Argus' forward oil-linked des Japan price indications.
While economic growth later this year and next will drive most of the improvement in the public finances, some difficult decisions will be required by the Irish government and the next one to close the gap between tax revenues and expenditure.
The UK government has a 2022 vision for increased use of recycled plastic in packaging, as evidenced by the Plastic Packaging Tax that will be enforced with financial penalties.

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Last updated: 09 August 2020