Jan Vleggeert: ‘Corona’ tax good idea, but how will it work?
The coronavirus pandemic has spelt disaster for some businesses, while others have seen their profits soar. This has led to politicians to consider introducing a ‘corona’ tax where the winners from the pandemic will help the losers get back on their feet.
The thinking behind this special tax is understandable, says Professor of Tax Law Jan Vleggeert on Dutch radio programme BNR Nieuwsradio. 'Billions of euros are being pumped into the economy to support businesses. This will have to be repaid at some point. There are various ways to do this: cutbacks, borrowing, but also through taxation. Those who have profited from the crisis would then have to pay more. I can follow that logic.'
But it is not quite that simple, says Vleggeert. 'Your sense of justice says: take that money from companies that have done well during the crisis. A good idea on the face of it, but how are you going to do it in practice? How do you identify those companies? TNT is delivering more packages and supermarket Albert Heijn is profiting too, we all know about those examples. But this would have to be defined in more general terms: which companies are you going to tax and which would escape the tax? That’s not easy.'
Another problem is defining which part of those companies’ profits was due to the coronavirus crisis. 'It’s difficult to split the profit of a company into sources. In the case of a pharmaceutical company you could trace the profit to a coronavirus medicine, but when it comes to delivery companies or a food products business, it becomes a lot harder.'
Jan Vleggeert also contributed to the discussion in Dutch newspaper de Volkskrant on the plans to tax companies that have profited from the pandemic. In this article, he proposes increasing corporation tax as an alternative. 'Then it would not be necessary to devise a whole new tax and a system to implement it. In Germany, this kind of solidarity tax was introduced following the reunification of East and West.'