UN calls for International Tax to Raise $400 Billion to Finance Development Needs
By Jepkemei Gachomo
The United Nations is proposing an international tax, combined with other innovative financing mechanisms, to raise more than $ 400 billion annually to be utilised for development and address global challenges such as fighting climate change.
In its annual report on global development World Economic and Social Survey 12: In Search of New 20 Development Finance, (WESS 2012) launched last week, the UN says that in the midst of difficult financial times, many donor countries have cut back on development assistance, with aid flows declining in real terms in 2011.
The survey finds that the financial needs of developing countries have long outstripped the willingness and ability of donors to provide aid while finding the necessary resources to achieve the Millennium Development Goals (MDGs) and meet other global challenges, such as addressing climate change, will be tough, especially for least developed countries.
“The need for additional and more predictable financing has led to a search for new sources – not as a substitute for aid, but as a complement to it. A number of innovative initiatives have been launched during the past decade, mainly to fund global health programmes aimed at providing immunizations, AIDS and tuberculosis treatments to millions of people in the developing world,” states the WESS 2012 report.
The survey finds that while these initiatives have successfully used new methods to channel development financing to combat diseases, they have hardly yielded any additional funding on top of traditional development assistance.
According to the lead author of the survey, Rob Vos, donor countries have fallen well short of their aid commitments and development assistance declined last year because of budget cuts, increasing the shortfall to $ 167 billion.
Vos added that although donors must meet their commitments, it is time to look for other ways to find resources to finance development needs and address growing global challenges, such as combating climate change.
“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, such taxes also make economic sense, as they help stimulate green growth and mitigate financial market instability,” noted Mr Vos, adding that such new financing mechanisms will help donor countries overcome their record of broken promises and benefit the world at large.
The survey also suggests other options which could be explored but would require further technical elaboration, such as a billionaire’s tax - which would consist of a small tax of say 1 per cent on individual wealth holdings of $1 billion or more - with the revenue destined to finance internationally agreed global development purposes.
“The survey provides important suggestions to generate solid financial underpinnings for the actions to be undertaken in follow up to the agreement reached at the recent United Nations Rio+20 Conference to achieve global sustainable development,” said Sha Zukang, Under-Secretary-General of the UN Department of Economic and Social Affairs.