Original scientific paper
https://doi.org/10.31141/zrpfs.2021.58.140.483
Consequences and effects of the COVID-19 pandemic on fiscal system and taxation
Nataša Žunić Kovačević
; Pravni fakultet Sveučilišta u Rijeci, Rijeka, Hrvatska
Abstract
Public policy's answer to the COVID-19 pandemic in the majority of countries worldwide has greatly and directly influenced fiscal systems. The measures undertaken in all public policy to combat or reduce the pandemic are reflected in fiscal politics in all its segments, which is particularly evident in the expense and profit sections because it concerns the effect on budgets and their expense and profit aspects. A clear, fiscal response to the health and consequential, wider economic crisis demonstrates the success or otherwise of financial management of the public sector. Crisis indicators present the dramatic effects on public financing and the fiscal system as a whole. The fiscal system with its measures at the same time is both an instrument in the battle against the Covid pandemic and is affected by the pandemic: public profits in first three months were reduced by 15-30%, and at the same time, expenses were increased by approximately 30-40% in comparison with the same period last year. Such a negative effect has been increased by the growing deficit and growing public debt. The measures undertaken within the framework of all public policies are all short term and subject to constant adjustments which is necessary given the fast changing social, economic, welfare, and fiscal environment and circumstances. It is possible to monitor the coordination in response to the crisis at both an international and European level as well as the national reaction and measures to the crisis. The OECD and European Union are preparing long-term measures and instruments, and at Union level has, along with other instruments, offered the temporary instrument of SURE. The time dimension of the undertaken measures is significant given the speed at which all the aforestated circumstances are changing. The high rate of indebtedness of the private and public sector which is increasing during the Covid pandemic will have long term consequences on the fiscal system overall. The types and means of decision making about all the measures to combat the Covid pandemic and their fiscal effects, even after the end of the pandemic crisis, could slow down the soon to be announced fiscal decentralization. Public finances will experience adjustment, through the application of both classic and adapted instruments and the creation of new instruments of fiscal policy to combat both existing and possible future crises.
Keywords
fiscal system; public policy measures; Covid pandemic and crisis; SURE; public finances
Hrčak ID:
257292
URI
Publication date:
7.5.2021.
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