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ECB: tax the rich

 


The European Central Bank’s chief economist has called on eurozone governments to tax rich people and companies more to finance support for those hit hardest by the energy crisis. Philip Lane said that funding for policies to help the most vulnerable groups in society «could take the form of higher taxes on higher earners or on industries and firms that are highly profitable despite the energy shock». Lane’s remarks were published after the UK government’s budget, which included a tax cut for the highest earners and triggered a bond sell-off and sharp depreciation of the pound. The UK and EU member states have unveiled fiscal support for households and businesses to deal with soaring energy prices.

Lane said governments faced a trade-off in choosing how to finance measures to support those hit hardest by the crisis created by Russia’s invasion of Ukraine, which has drastically cut Moscow’s supply of natural gas and oil to Europe. «From the view of fairness, but also a macroeconomic perspective, governments should support the income and consumption of those households and firms suffering the most,» said Lane.

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