U.N. Calls for Tax on Ultrarich to Boost Development
What if billionaires the world over are asked to shell out at least one percent of their wealth as an international tax for development?
The question arises in a new U.N. survey, which bemoans the fact that many donor nations continue to shy away from fulfilling their pledge to finance development goals by providing 0.7 percent of their Gross National Product (GNP).
“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,” said Rob Vos, the lead author of the report, entitled “World Economic and Social Survey 2012: In Search of New Development Finance.”
In their analysis, Vos and his colleagues suggest that a one percent tax on one billion dollars holding could help gain better results in regard to financing for internationally agreed development initiatives.
Currently, there are at least 1,225 billionaires in the world from 58 countries, according to Forbes magazine. The U.S. alone is home to more than 400.
The global survey says there is an urgent need to find new sources of support for development because many donor countries have failed to keep their promises, a situation worsened by the prolonged economic recession.
According to the U.N., there is a shortfall of 167 billion dollars in terms of Official Development Assistance, which is making it difficult for various agencies involved in achieving development goals aimed at fighting poverty, deadly diseases and climate change.
Thus, in addition to an international tax, the U.N. is proposing several other ways to tap resources that could strengthen international actions for sustainable development, such as taxes on carbon emissions, air traffic, and financial and currency transactions.
The U.N. says it wants to raise more than 400 billion dollars annually for development and global challenges such as fighting climate change. But that is an amount that is becoming increasingly hard to secure from governments.
U.N. studies show that a large number of developing countries remain far behind in terms of achieving the Millennium Development Goals, mainly because they lack financial resources and assistance from the donor nations.
Researchers say they have witnessed some success in regard to global health programs aimed at providing immunizations, AIDS and tuberculosis treatments to millions of people in the developing world, but add that such initiatives hardly yielded any additional funding on top of traditional development assistance.
“Donor countries have fallen well short of their aid commitments and development assistance declined last year because of budget cuts, increasing the shortfall,” said Vos, adding that donors “must meet their commitments”.
Experts who carried out the survey see potential to raise over 400 billion every year by taxing carbon dioxide emissions in developed countries: a 25 dollar tax per tonne would raise an estimated 250 billion dollars per year, collected by national authorities, but earmarked for international cooperation.
The survey also recommends a tiny currency transaction tax of one half of a “basis point” (0.005 per cent) on all trading in four major currencies (the dollar, euro, yen and pound sterling), which could yield an estimated 40 billion per year for international cooperation, among other measures.
Such taxes also make “economic sense” as they help stimulate green growth and mitigate financial market instability, Vos said.
In his view, such new financing mechanisms will help donor countries overcome “their record of broken promises to their own benefit the world at large.”
“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 U.N. Department of Economic and Social Affairs.
The survey points out that the design of appropriate governance and allocation mechanisms is crucial for innovative financing to ultimately meet development needs and contribute to financing the post-2015 development agenda.
In recent years, a number of mechanisms have been developed under the rubric of innovative development finance, mostly in the field of health. The survey confirms that these mechanisms helped improve aid effectiveness and contributed to the financing of the Global Fund to Fight AIDS, Tuberculosis and Malaria.
However, according to researchers, the funds channeled through these programs have mainly come from existing aid budgets, rather than generating additional resources. Overall, a total of 5.8 billion dollars has been channeled through these innovative mechanisms since 2006, but only a few hundred million dollars can be counted as additional to existing aid.
There is an urgent need for additional resources, and proposing an international tax for development is one of those, they said.
But whether the “billionaire’s tax” is feasible remains an open question. “We made this suggestion (but) technically it’s very difficult,” Vos told IPS.