Can the financing gap be closed?
UN panel suggests new international taxes to help fund development
From Africa Recovery, Vol.15 #4, December 2001, page 22
As aid from rich countries slides further, a UN independent panel on development financing recently proposed new ways of raising more funds to rescue millions of people from poverty -- most of them in sub-Saharan Africa. In 1999, donor countries gave just $12 bn to the region as official development assistance (ODA), $6 bn less than they gave in 1995. Such aid, even at its peak, fell far short of the continent's needs.
The panel, chaired by former Mexican President Ernesto Zedillo, was set up by UN Secretary-General Kofi Annan to identify innovative methods for raising the estimated $50 bn needed yearly to implement the UN's commitments to poverty reduction and sustainable growth in developing countries. Its recommendations will be considered by the UN conference on financing for development, to be held in Monterrey, Mexico, in March 2002.
Among the proposals are taxes on the consumption of fossil fuels and on international currency transactions. The panel urges new ways to boost aid and investment flows to poor countries, and to assist countries raise funds from within their own economies through better political and economic management, including by improving their ability to collect domestic taxes. Such efforts would be supported by the establishment of an international tax organization and the holding of a summit that would address problems arising from globalization, the panel stated.
Members agreed that reversing the widening and "shameful" gap between rich and poor countries "is the pre-eminent moral and humanitarian challenge of our age." And sub-Saharan Africa, they noted, should be a priority. "Nowhere is a global commitment to poverty reduction needed more than in this region. Sub-Saharan Africa has the largest proportion of people living on less than one dollar a day, and indeed, its people are almost as poor as they were 20 years ago."
A currency tax
Combating poverty, the panel argued, requires the provision of vital services which strengthen social and political stability, such as peacekeeping, healthcare facilities and programmes for environmental protection -- described collectively as "global public goods." To secure the enormous amount of money needed yearly for that, it said a global system of taxation is necessary, either through a currency transaction tax or a tax on the consumption of fossil fuels.
