Oxfam accuses the IMF of a “troubling double standard” in tax advice, handing progressive policies to rich nations while pushing regressive measures on India and the Global South that risk deepening inequality.

A fresh Oxfam-backed study has revealed that India received the highest number of regressive tax recommendations from the International Monetary Fund (IMF) between 2022 and 2024. The analysis, published in the journal Global Policy and titled “Progressive Rhetoric, Regressive Reality: The IMF’s Tax Advice to 125 Countries, 2022–2024,” examined 1,049 tax reform proposals issued in the IMF’s Article IV surveillance reports. Researchers Alexandros Kentikelenis and Thomas Stubbs found that while wealthy countries were steered toward progressive taxation, poorer nations – including India – were overwhelmingly advised to adopt measures likely to burden low- and middle-income households more heavily.

The report, released just ahead of the IMF and World Bank spring meetings in Washington, classifies taxes as progressive if they increase the burden on higher-income groups or ease it for lower-income ones. Regressive taxes do the opposite – placing a proportionally heavier load on the poor. According to the findings, 59 per cent of the IMF’s tax advice to low- and lower-middle-income countries was regressive, compared with only 52 per cent of recommendations to high-income countries being progressive. Only 30 recommendations – roughly three per cent – focused on net wealth taxes or capital gains taxation, despite billionaire wealth surging 81 per cent since 2020.

India Bears the Brunt of Regressive Advice

India and Belize topped the list for the sheer volume of regressive recommendations. Specific IMF suggestions to New Delhi included reversing fuel excise tax cuts, introducing carbon pricing, extending personal income tax coverage to informal workers, and removing preferential treatment for certain items under the Goods and Services Tax (GST) regime. These proposals, drawn from India’s 2023 Article IV consultation, form part of a broader pattern: South Asia received by far the most regressive tax guidance from the IMF, followed by Latin America and the Caribbean and sub-Saharan Africa.

Oxfam’s analysis underscores how such policies could exacerbate existing inequalities. India already relies heavily on indirect taxes such as GST, which critics have long described as regressive because they are levied uniformly regardless of income. Critics argue that the bottom 50 per cent of Indians, who spend a larger share of their earnings on essentials, end up contributing disproportionately to indirect tax revenues. By urging further broadening of the tax base and removal of exemptions, the IMF’s advice risks intensifying this burden without commensurate measures to tax wealth or high incomes more effectively.

Global South Faces Unequal Treatment

The disparity in IMF advice is stark. High-income nations such as the United States and Brazil received the most progressive recommendations, along with Canada, Australia, France, the United Kingdom, the Netherlands, Switzerland, Sweden, Norway, China, Kazakhstan, Angola and Botswana. In contrast, low- and lower-middle-income countries were frequently told to raise value-added taxes, increase consumption levies or eliminate exemptions – measures that the report says “place the bulk of the tax burden on middle- and low-income people while leaving the wealthiest unscathed.”

Examples abound. In Chile – one of the most unequal countries in Latin America – the IMF advised raising tax rates for low- and middle-income groups while sparing top earners. In Nigeria, where nearly one-third of the population lives in extreme poverty, the Fund suggested increasing VAT. In Hungary, it opposed a windfall profit tax on energy companies. Kate Donald, Head of Oxfam International’s Washington office, did not mince words: “The IMF is operating with a troubling double standard that calls into question the evenhandedness it holds as a core principle. It offers mostly progressive tax advice to rich countries, yet its guidance for the rest of the world remains largely regressive.”

The study also notes that the IMF links tax policy to inequality far more often when advising wealthy nations (34 per cent of cases) than when dealing with poorer ones (just 8 per cent), even though nearly 90 per cent of low- and lower-middle-income countries suffer from medium or high inequality.

Oxfam Urges Systemic Reform at IMF

Oxfam is calling on the IMF to place inequality at the heart of all fiscal advice, default to revenue-raising policies that enhance tax progressivity, and move away from over-reliance on consumption taxes. The organisation wants the Fund to conduct and publish rigorous distributional impact assessments for every recommendation in its Article IV reports. It also urges the IMF to broaden support for taxing high-net-worth individuals and corporations while curbing tax avoidance and harmful tax competition. Finally, Oxfam has asked the Fund to create a centralised, user-friendly database to track and publicise its tax advice.

The authors of the academic paper echo these demands. They argue that the IMF must recalibrate its policy frameworks to align with global momentum for wealth taxes – now a G20 priority under South Africa’s presidency – and use its influence to promote equitable growth rather than entrench inequality. “Current advice entrenches rather than redresses the very inequalities it claims to address,” they warn.

Implications for India’s Tax Policy Debate

For India, the timing of the report is significant. The country has been grappling with balancing fiscal consolidation, infrastructure spending and welfare schemes amid slowing private investment and persistent rural distress. While the government has defended its GST regime as a major reform that simplified taxation and boosted compliance, critics – including previous Oxfam reports – have highlighted how indirect taxes continue to form a larger share of revenue compared with direct taxes on income and wealth.

Economists note that carbon pricing, while environmentally necessary, can be regressive unless paired with rebates or targeted support for low-income households. Extending income tax to informal workers – estimated to make up over 80 per cent of India’s workforce – could broaden the tax net but risks pushing vulnerable earners further into poverty without adequate social protection. Reversing fuel excise cuts might help revenue but would raise transport and cooking costs for millions.

The Oxfam study does not claim the IMF forces countries to adopt its advice; Article IV consultations are non-binding surveillance exercises. Yet the Fund’s recommendations carry significant weight, shaping investor perceptions, credit ratings and policy discourse in developing economies.

As global inequality reaches new extremes, the report serves as a timely reminder that tax policy is not merely a technical fiscal tool but a powerful lever for – or against – social justice.

Illustration: Grok