Tax

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.
France is among EU countries that have already passed a digital tax which it plans to apply this year regardless of whether there is progress towards an OECD-wide deal.
Other Chinese manufacturers 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 problem of how to enable the Recovery Fund to borrow at long maturities could be reduced if the funding of the EU budget was based on genuinely own EU tax revenue.
The South Korean Democratic Party has pledged net zero emissions by 2050, carbon taxes, an end to coal financing at home and abroad, and sufficient support for workers transitioning to green jobs.
Wind projects which began construction in 2016 need to be operational by the end of the year to qualify for the U.S. tax credit which is forecast to create a surge in installations this year.
U.S. growth was largely due to a short-term extension of a production tax credit for wind projects and plans to invest $57 billion to install up to 30 gigawatts (GW) of offshore wind by 2030.
Returning to the chronic 10% average structural unemployment rate seen in the UK throughout the decade of 1980s could entail a cost to the public finances of around £175 billion in lost taxes and higher benefit spending over the next 5 years.
The US has unseated China from the No. 1 spot, because of a short-term extension to the [Congress' Production Tax Credit] and long-term growth in offshore wind, with plans to invest $57 billion to install up to 30 GW by 2030.
COVID-19 has put 25 gigawatts of US wind projects at risk, representing 35,000 jobs, $35 billion in investment, and $8 billion in tax revenues and land lease payments for state and local economies.
Based on Moody's estimates, FY 2021US state tax revenues stand to be about $154 billion lower than they were in FY 2020, and $33 billion lower than Moody's anticipates in FY 2020, a year the ratings services estimates will itself close 11% lower than FY 2019.
The UK rate of inheritance tax will stay at 40%, but in 2020-21 individuals will be able to pass on £ 175,000-worth of tax-free property, up from £150,000 in the current tax year.
In the USA, the Trump administration has proposed a payroll tax cut, which will put more money into the pockets of workers immediately, but which may also bankrupt the Social Security and Medicare programmes.
So far 32 states have repealed or are considering bills to repeal sales taxes on menstrual products: A state analysis finds that Washington would lose $4.1 million in revenue in the coming fiscal year and $9.4 million in the 2021-2023 biennium.

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Last updated: 05 July 2020