IMF’s tax advice fair or biased? India received most regressive recommendations, says Oxfam

India received the highest number of regressive tax policy recommendations from the International Monetary Fund (IMF) between 2022-2024, Oxfam said on Monday.

The report flagged that the global body is applying "double standard" by giving largely progressive advice to wealthy countries while suggesting regressive measures for others that are "likely to exacerbate inequality".

The findings are part of an Oxfam analysis of over 1,000 tax recommendations made by the IMF to 125 countries between 2022 and 2024, ahead of the upcoming IMF and World Bank Spring Meetings in Washington, DC.

According to the report, a majority of the IMF’s tax advice to low- and lower-middle-income countries, including India, has been regressive in nature, relying more on measures such as consumption taxes that tend to impact poorer households more than the wealthy.

“India received the highest number of regressive recommendations,” Oxfam said, adding that South Asia as a region saw the most regressive tax guidance from the multilateral lender.

A regressive tax refers to a uniform taxation system which burdens those in lower income groups more than high earners.

The IMF’s recommendations to high-income countries were found to be largely progressive, focusing more on taxing higher incomes and wealth.

About 52% of tax advice to advanced economies was progressive, while 59% of guidance to poorer nations was regressive, the analysis noted.

Oxfam also flagged that taxation of wealth remains largely absent from IMF guidance globally.

Only about 3% focused on taxing net wealth or income derived from wealth, such as capital gains.

This comes despite a sharp rise in global wealth concentration, with billionaire wealth increasing by 81% since 2020, the report said.

Oxfam International’s Washington DC Office Head Kate Donald said the IMF’s approach risks exacerbating inequality by shifting the tax burden onto ordinary citizens.

“The Fund is reinforcing a system in which ordinary people, already strained by rising prices, are forced to shoulder the brunt of taxes, while extreme wealth remains largely untaxed,” she said.

The report also pointed to disparities in how the IMF links tax policy to inequality.

While about 34% of its tax advice to high-income countries explicitly addressed inequality concerns, the share was just 8% for low- and lower-middle-income countries, even though inequality levels are high in most of them.

Oxfam said Chile was advised to raise taxes on low- and middle-income groups without increasing rates for top earners, while Nigeria was encouraged to increase value-added taxes despite high poverty levels. Hungary, meanwhile, was advised against implementing a windfall tax on energy firms.

Oxfam urged the IMF to place inequality at the centre of its fiscal advice, expand recommendations on taxing wealth and high-net-worth individuals, and reduce reliance on consumption-based taxes.

It also called on the Fund to publish distributional impact assessments of its policy advice and improve transparency through a centralised database tracking tax recommendations.

The IMF has not yet responded to the findings.