Fiscal Challenges in Pandemic Times

Abstract

The unexpected health crises that appeared at the end of 2019 and endures currently hadtriggered serious government challenges in conducting efficient fiscal policy. The growinghealth, educational, social, and other costs corelated with the health crisis had raisedintense reactions in governments through higher public expenditures that were financeddominantly from international financial markets. Already higher public debt to GDP ratioin some countries overcome the Maastricht criteria of this crucial fiscal variable that raisedsome serious questions for future government financial responses. This pandemic openedsome suggestions and considerations for major or minor tax reforms in some countries.If previously the governments were repellent to introduce some tax changes, now they seeopportunity to easily justify this fiscal step. The people subjected to COVID-19 disease areaddressing more publicly the need for substantial government help regarding the healthcosts. The IMF surveys show that people who faced this illness are more demanding forchanges in distributional fiscal function. The companies and households with extra profitsand income should be taxed with higher income tax rates and corporate taxes. The reasonfor this demand is the ongoing process of unevenly distributed national income that inpandemic circumstances affects more lower layers of income households. However, thereal sector in North Macedonia is publicly against higher tax rates, and they demand fromgovernment first to legalize the grey economy that they perceived as serious competitiveand fiscal problem.