Posted on 12-7-2004
U.N.
to Put Global Taxes Centre Stage
by Thalif Deen
UNITED NATIONS, Jul 8 (IPS) - Despite strong reservations by
the United
States, Japan and Germany over proposed new global taxes, the
United
Nations is set to take centre-stage in the longstanding controversy
over
new sources of innovative funding for the world's poorer nations.
''The debate has already entered the United Nations,'' says
U.N.
Under-Secretary-General Jose Antonio Ocampo, head of the department
of
economic and social affairs (DESA). ''We have been requested
to prepare a
study, the results of which will be presented to the General
Assembly (in
September) this year,'' he told IPS.
The proposals on the table include a carbon tax on fuel use,
the 'Tobin
tax' on currency transactions, a levy on international sales
of weapons, a
global lottery and a tax on international airline travel. ''Although
some
key countries are very strongly opposed to these proposed global
taxes,''
Ocampo said, ''a number of developed and developing countries
(for example
France and Brazil) are giving them careful consideration."
U.N. Secretary-General Kofi Annan has warned that unless current
development assistance is doubled to 100 billion dollars annually,
the
world's 132 developing nations will fail to meet their Millennium
Development Goals (MDGs). These goals are aimed at reducing
poverty,
improving education and health care, eliminating diseases, and
preventing
environmental degradation -- all by the 2015 deadline set by
the U.N.
General Assembly in 2000. ''We need action. There is an urgent
need for a
critical mass of new resources to deal with a wide spectrum
of human
hardship,'' says Annan, who strongly supports finding new sources
of
funding. ''One of the most innovative ideas,'' he told the U.N.
Conference
on Trade and Development (UNCTAD) in Brazil in June, ''is an
International
Financing Facility (IFF) proposed by the United Kingdom, that
would
'frontload' aid to meet the MDGs.''
But the proposal for an IFF has split the 25-member European
Union (EU).
EU Commissioner Poul Nielson says ''a sleight of hand with the
rules of
public finance -- that mortgages future aid programmes -- is
no substitute
for the hard political task of securing and sustaining the will
to provide
increased aid, now and for many years to come.'' ''This leads
me to say
that the IFF is really not the right way to go. Fighting global
poverty is
not something we should leave to be paid for by our children
and
grandchildren,'' Nielson told UNCTAD delegates.
He added that international taxation offers one approach that
would
promise lasting resources for development, although the European
Commission has not taken a view on specific proposals. But he
warned that
''all of the proposals (for global taxes) have their problems."
''Given
the parlous state of many of the least developed countries (LDCs),
it is
clear that something needs to be done to raise money to help
them out of
their continuing and deepening financial crisis,'' says Daphne
Davies of
the Brussels-based LDC Watch, a non-governmental organisation
(NGO) that
monitors the world's 50 poorest nations. ''There have been several
proposals for global taxes, many of which fail because they
are vague and
difficult to implement,'' Davies told IPS. ''However, two could
be
particularly targeted for use within Least Developed Countries:
an
environment tax -- based on the 'polluter pays' principle --
and a global
tax on arms sales," she said.
Many LDCs, such as the Democratic Republic of Congo (DRC) are
fabulously
rich in mineral wealth, Davies added. But several do not benefit
from that
wealth, and extracting the minerals is a major despoiler of
the
environment.
Most LDC governments, she argued, are in a weak position to
set conditions
on how such activities are carried out, particularly by foreign
companies.
Some LDCs have also experienced vast corruption by their own
governments,
which have appropriated revenues earned from resource extraction.
To overcome all these problems, Davies said, NGOs from LDCs
have suggested
a 'polluter pays' clause for extracting natural resources. A
mechanism
could be set up, under the auspices of the United Nations, and
overseen by
the U.N. Environment Programme (UNEP), she suggested. Companies
that
extract natural resources would pay a percentage of the value
of the
wealth they earn into a fund, whose money would then be used
to improve or
to restore the environment in LDCs, Davies added.
She said that Brazilian President Lula da Silva last year suggested
a tax
on arms sales. ''This type of tax would help LDCs, as civil
wars and
conflicts are some of the greatest causes of poverty and underdevelopment
in LDCs,'' according to Davies. The majority of these conflicts,
she said,
have taken place in sub-Saharan African LDCs. It was calculated
that in
1999 the region spent 4.4 percent of its gross domestic product
(GDP) on
defence spending -- the highest rate in the world -- compared
with 3.1
percent by the United States, 2.3 percent by Europe and the
North Atlantic
Treaty Organisation (NATO) and 3.2 percent by non-NATO Europe.
According to the Stockholm International Peace Research Institute,
the
worldwide value of weapons deliveries is about 32.6 billion
dollars
annually. The richest developed nations and the world's major
powers --
including the United States, Russia, Canada, France, Italy,
Japan and the
United Kingdom -- account for more than 85 percent of arms sales.
''Perhaps the reason why western nations are not in favour of
the (tax)
idea is because it would, a) highlight the role they play in
producing and
selling arms to LDCs, and, b) force them to pay tax on arms
sales,''
Davies added.
If just one percent of arms sales were paid each year into a
global fund,
administered by the United Nations, it would raise hundreds
of millions of
dollars. Part of that money could then be used for post-conflict
rehabilitation and government building in LDCs, according to
this idea.
Ruby van der Wekken of the Helsinki-based Network Institute
for Global
Democratisation (NIGD) said that today the proposal for a tax
on currency
transactions (CTT) is by far the most viable suggestion of all
global tax
initiatives. The dual effect of this tax (decrease in speculation
and more
resources for democratically decided "good issues")
makes it very
appealing, she said.
The effort to set up the tax system would be a small price to
pay to fend
off the huge economic and human costs of global financial meltdown
and
instability, van der Wekken suggested, adding that slackening
global
conditions are at least partially due to the re-emergence of
global
financial markets. ''Once the currency transactions tax, including
a
democratic system of the redistribution of the income is implemented,
other forms of global taxation could easily be set up,'' she
told IPS.
''Although the currency transactions tax may not be realised
tomorrow, we
hope that we will not need another severe currency crisis before
the
proposal gains stronger wind under its wings,'' she added.
During the first months of 2004, including at the June UNCTAD
meeting,
Lula da Silva has repeatedly suggested the need for a tax on
speculative
financial transactions, especially those conducted in international
"tax
havens''. The governments of France and Chile have apparently
decided to
support the initiative, van der Wekken said. Asked why countries
like the
United States oppose it, she said both the United States and
Britain rely
on income that financial speculators take to London and New
York. Also, as
many research reports show, the beneficiaries of currency crises
are often
western investors, she added.
Van der Wekken warned that while it may appear to decision-makers
that the
U.S. dollar is difficult to speculate against, while currencies
of other
countries -- or smaller currency zones -- are easier targets,
"we however
think this is a mistake, for the U.S. dollar may also collapse."
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