Public support for tax policies in COVID-19 times: evidence from Luxembourg.

We study attitudes towards the introduction of hypothetical new taxes to finance the cost of the COVID-19 pandemic. We rely on survey data collected in Luxembourg in 2020. The survey asks for the agreement of respondents over: a one-time net wealth tax, an inheritance tax, a temporary solidarity income tax, and a temporary increase in VAT. All questions include different and randomly assigned tax attributes (tax rates and exemption amounts). We find a clear divide with relatively high support for new wealth and inheritance taxes on the one hand and a low support for increases in VAT and income taxes on the other hand. While 58% of respondents agree or strongly agree with a one-time tax levied on net worth, only 24% are in favor of a small increase in VAT. Support for any tax is however negatively associated with the size of the tax as measured by the predicted revenues. Our results indicate that a one-time wealth tax could raise substantial revenues and still garner public support. Supplementary Information: The online version contains supplementary material available at 10.1007/s10797-022-09744-y.

Peru’s Social Policy Response to Covid-19: Jeopardizing Old-Age Security

Peru has one of the highest number of deaths proportional to its population and a severely hit economy, even though it was one of the first countries to implement strict social distancing measures and an ambitious plan for fiscal stimulus and economic relief for households. The response of the state was mostly based on (i) various cash transfers for the most vulnerable;(ii) policies to activate the economy such as a program to guarantee loans to firms;and (iii) allowing withdrawals from individual pension pots. Unfortunately, a combination of low financial inclusion, deficiencies in registers and structural limitations compromised the effectiveness of the social transfers, reaching recipients late or never. Furthermore, depleting pension funds may ease liquidity concerns in the short run, but the negative consequences on securing a pension for the future are immense. Worse, individuals who are not experiencing hardship can also make these withdrawals. Other countries, like Chile, have followed, paving the way for a dangerous trend that can jeopardize old-age security.