|Department of Public Information • News and Media Division • New York|
Press Conference on Launch of ‘World Economic and Social Survey 2012’
With donors slashing development aid due to the global economic crisis, the United Nations is proposing international taxes and other innovative financing mechanisms to raise more than $400 billion annually to meet global priorities like fighting climate change and meeting the Millennium Development Goals, according to the Organization’s annual global development report, released at Headquarters today.
“We are suggesting various ways to tap resources through international mechanisms, such as coordinated taxes on carbon emissions, air traffic and financial and currency transactions,” said Robert Vos, Director of the Development and Analysis Division in the Department of Economic and Social Affairs and lead author of World Economic and Social Survey 2012 subtitled“In Search of New Development Finance”.
At the launch press conference, he noted that in 2011, aid flows had declined in real terms for the first time in many years, resulting in a $167 billion shortfall in development assistance. While donors must still meet their commitments, new resources must be found, he stressed, noting that existing initiatives to fund projects, mainly combating communicable diseases in the developing world, where needs were greatest, had been successful. However, the scope for replicating or scaling them up was insufficient to meet development-financing needs in the coming decade. The proposed taxes would not only help to fill that gap, they also made economic sense as they would stimulate green growth and mitigate financial market instability. “In short, such new financing mechanisms will help donor countries overcome their record of broken promises to their own benefit and the world at large.”
Among the new mechanisms identified in the report are a tax of $25 per ton on carbon dioxide emissions in developed countries; a “tiny” currency transaction tax on the four major global currencies — United States dollar, euro, yen and pound sterling — and earmarking a portion of the proposed European Union financial transaction tax. Such measures would raise an estimated $250 billion, $40 billion and $71 billion annually, respectively, the report states. Additionally, regular allocations of International Monetary Fund (IMF) special drawing rights, as well as use of “idle” special drawing rights, could yield some $100 billion annually to purchase long-term assets that would in turn be used as development finance.
Mr. Vos said that innovative financing for tackling climate change, which had totalled $2.6 billion in the last decade, held particular promise in the coming years as the European Union shifted to auctioning emission allocations, potentially generating some $20 billion to $35 billion annually.
Asked to elaborate on how the taxes would be agreed in order to raise the projected $400 billion a year, he said that, while it was difficult to give a timetable, the report stressed that the time was “more ripe” than it had ever been to discuss innovative mechanisms. The proposed taxes, which were technically feasible and would not distort financial markets, could be agreed and administered through regional or international agreements. Additionally, the United Nations could help countries agree on tax coordination and build on existing funds, as could the G‑20, which was currently discussing the proposed financial transaction and currency taxes.
Responding to a question about the feasibility of a global carbon tax, he said some European countries, in addition to Australia and Canada, had already introduced it and most economists agreed that it was probably the best way to influence consumer behaviour and reduce the use of fossil fuels.
He noted that all Member States had already agreed to and set up a global green climate fund, which served as a starting point for consolidating disbursement mechanisms intended to tackle climate change. Similarly, the report argued for setting up a “global fund for health” to replace the existing array of disease-specific funds that had led to the fragmentation of international support for health-care systems in low-income countries.
Asked to elaborate on the implementation of a billionaire’s tax, which the report also proposed, he said that was technically still very difficult, given the lack of good records on the wealth holdings of billionaires, but it could be imposed in future through globally coordinated tax mechanisms. He pointed out that the interest earned on billionaires’ income would far outstrip the proposed 1 per cent tax.
When asked whether the United States Government would approve any international tax, particularly since it was now engaged in heated debate over whether to approve a national health-care tax, he acknowledged such political constraints, saying much discussion on the matter would be needed in that country and elsewhere. The report argued that if climate change was taken seriously, countries like the United States could easily increase revenue by introducing a gasoline tax, he noted.
Asked how the euro zone crisis that had already caused Greece, Spain and Ireland to cut development aid would affect support for the proposed taxes, he said that despite the cuts, the Governments of those countries had not opposed the tax, which was small. “There is political space to accept these kinds of taxes, but clearly the need is to do so in the form of international agreements to make them work.”
Concerning the feasibility of the proposed airline tax levy, he said the money earned thus far by France, the Republic of Korea, several developing countries as well as African countries was much smaller than expected. Many more countries, particularly the world’s largest economies, must participate in order to make that tax more relevant.
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