GPF Perspectives | Articles
GPF Perspectives
Progress on Global Taxes? (February 5, 2010)
In recent years, political leaders and influential institutions have taken important steps toward global taxes, and have succeeded in making the topic less of a taboo in international relations. While welcoming these developments, Katarina Wahlberg of Global Policy Forum argues that the recent high-level proposals neglect the vital role global taxes can play in steering global environmental and financial policy. Moreover, these proposals fail to guarantee that the tax revenue will be additional to Official Development Assistance (ODA) and spent in a democratic way to finance real development.
Statement by Jens Martens, Global Policy Forum/Social Watch (June 23, 2005)
This statement, made at the NGO Hearings of the General Assembly, addresses the state of Official Development Assistance (ODA) on the eve of the Millennium +5 Summit. While rich nations claim that increasing ODA is impossible due to budgetary constraints, Martens points out that global arms spending topped $1 trillion last year. Martens also criticizes the proposed International Finance Facility (IFF) because it does not incorporate the voices of poor countries, and he concludes that the only feasible way of implementing the IFF is in combination with global taxes as a means for refinancing.
Global Taxes for Global Priorities (March 2002)
A comprehensive analysis of global tax proposals, with special focus on the carbon tax and the currency transaction tax. The paper considers the political progress of these proposals and their potential for revenue raising, policy steering and redistribution, as well as other common themes.
Global Taxes and Charges: A Brief Introduction
Brief introduction for those unfamiliar with the issue of global taxes and charges.
Global Taxes and Fees: Recent Developments and Overcoming Obstacles
Major analytical paper written by Kevin Baumert of Global Policy Forum.
Articles
2012
On Taxing the Rich, a Top Pol Breaks Ranks (March 3, 2012)
In the decades right after the second World War, the world’s top industrial nations routinely subjected their highest income earners to tax rates of 70, 80, and even 90 percent. However, when conservatives swept power in Britain and the US - Margaret Thatcher and Ronald Regan respectively - they obliterated steeply progressive tax rates. Today, no mainstream political leader would dare to propose anything that goes beyond a 50% top tax rate. Last Monday, the presidential candidate of the French Socialist Party Franḉois Hollande broke with this trend, pledging to enact a 75% top rate tax if elected this May. Made in the midst of the presidential race, this announcement needs to be taken with a grain of salt. Notwithstanding, the pledge in itself ought to be welcomed as it breaks with an unchallenged taboo in the political mainstream. (Institute for Policy Studies)
Europe’s Tobin Tax Distraction (February 9, 2012)
Europe’s political leaders intend to introduce a financial transaction tax (FTT) as a key part of their efforts to contain and solve the financial and economic crisis. The levy – modeled after James Tobin’s eponymous currency tax – is supposed to end financial market volatility and generate revenues to deal with government debt. Earlier versions were proposed to finance outstanding development aid commitments, commitments that are yet again shelved in the name of self-interest. Economist Barry Eichengreen argues that the proposed FTT will miss its mark and can only be understood in terms of political gain rather than economic sense. Even though an FTT will decrease the number of transactions, it will mainly incentivize investors to go elsewhere and do nothing to mitigate Europe’s critical banking problem. (Project Syndicate)
Taking on the Speculators - What Would a European Tobin Tax Really Mean? (January 11, 2012)
Nicolas Sarkozy has long been advocating for the introduction of a Financial Transaction Tax (FTT) in Europe. Pursuing the aim of redistributing wealth and influence, the tax is presented as an ideal tool to exert greater control over financial markets while at the same time raising revenues to finance development. This week the French President won the backing of the German Chancellor who, besides facing opposition within her own coalition government, stated that “personally, I’m in favor of thinking about such a tax in the Euro Zone” if necessary without Britain, Europe's largest financial center. This Spiegel article explains how a European FTT would work, what its main advantages and disadvantages are and whether it is feasible to think about a European FTT without one of its greatest economic powers. (Spiegel Online)
2011
Tiny Tax on Financial Trades Gains Advocates (December 6, 2011)
This New York Times article highlights different points of view on a prospective Financial Transaction Tax (FTT), a small levy on financial transactions that is gaining broad public support. All versions of an FTT share the simultaneous goals of countering financial market volatilities and raising revenues. They differ, however, on the height of the tax and the allocation of revenues. Whereas several countries and advocates are attempting to steer current momentum towards the use of revenues for domestic projects, the FTT’s most influential supporters underline its original and most pressing redistributive goal: increasing development aid. It is this goal and that of preempting future financial crises that trump opportunistic arguments in favor of large investors and budget balancing in rich countries. (The New York Times)
Emerging Economies Join G20 Coalition to Tax Speculation (November 4, 2011)
Last week’s G20 summit in Cannes elicited mixed reactions within the development community regarding the process made towards a G20-wide agreement on taxing financial transactions. World leaders promoting a financial transactions tax were praised by activists and development workers. France, Germany, Spain, the European Commission, South Africa, Brazil, and Argentina joined the "coalition of the willing" in support of the tax. Conversely, the opposition from the United Kingdom, Canada, and the United States was sharply criticized. (Institute for Policy Study)
To Ease the Crisis, Tax Financial Transactions (September 28, 2011)
In this op-ed piece, Philippe Douste-Blazy, a former French Minister of Foreign Affairs, and current UNITAID Chairman, argues for the swift imposition of a small Financial Transaction Tax (FTT). A levy on all types of financial and currency transactions, the tax would serve to slow down activity of otherwise volatile markets, soften the effects of the financial crisis and secure countries’ commitments to development aid. Convinced of its moral imperative and practical feasibility, Douste-Blazy underlines the fact that revenues should not only be used to solve Western budgetary problems but particularly to honor extant aid commitments and aid commitments more recently generated by the “casino-style trading” of Western financial institutions. (New York Times)
France Steps Up Support for Financial Transaction Tax (September 16, 2011)
France’s adoption of a resolution to introduce a Financial Transaction Tax (FTT) shows an unprecedented willingness among the world’s governments to consider a tax aimed at funding development at home and abroad. According to the Leading Group on Innovative Financing for Development, a FTT of 0.5 percent on transactions could raise $409 billion dollars a year globally. Not only civil society but also governments, are now asking: If the financial sector benefits from globalization, why should it notcontribute to redress the problems created by this very process? (Inter Press Service)
Financial Crisis 2: Rise of the Machines (August 22, 2011)
This report by the Robin Hood Tax campaign warns of the rapid increases in “high frequency trading” (HFT) and promotes a tax-based remedy. HFTs are computer-driven trades that use algorithms to buy and sell large amounts of financial products that meet specific criteria, and do so at lightning speeds. Apart from the already worrisome volatility and price-increases that HFTs create, different algorithms can collide and create a “flash crash” that has the potential to ignite a financial crisis. The application of a small tax could not only reduce the incentive to partake in this form of trading, but also raise funds for sustainable development and the reduction of poverty. (Robin Hood Tax)
The Robin Hood Tax: A Small Step for Capitalism, a Big Stride for Development (August 23, 2011)
In this contribution to the Guardian’s “Poverty Matters” blog, Mark Lawson of Oxfam comments on a new report by the Robin Hood tax campaign that warns of the rapid increases in “high frequency trading” (HFT) and promotes a tax-based remedy. HFTs are computer-driven trades that use algorithms to buy and sell large amounts of financial products that meet specific criteria, and do so at lightning speeds. Apart from the already worrisome volatility and price-increases that HFTs create, different algorithms can collide and create a “flash crash” that has the potential to ignite a financial crisis. According to Mark Lawson, a small tax on HFTs could not only slowdown HSTs, but also raise revenues that should be redistributed towards “helping poor people at home and abroad”. (Guardian)
Poor Countries Fight For Reform of Global Tax Systems (July 27, 2011)
In Geneva, global leaders are debating a controversial global tax deal. According to leaders of the larger developing countries, the deal on the table still allows for tax avoidance by multinationals, which has been "eating into the fiscal base of many countries”. Brazil, Mexico, and other developing countries want to gain more influence in this area by challenging the OECD’s privilege to set global tax rules. Conversely, the US and EU want the OECD to continue dominating global tax policy. As a quarter of the G20 supports global tax restructuring, including future chair Mexico , developed countries should reassess global tax rules and possibly work closer with the UN’s tax committee; an institution that is known for its effectiveness and ability to advise developing countries on issues of taxation. (Guardian)
2010
Africa May Have Lost $1 trillion to Tax Evasion (April 1, 2010)
According to a new report released by Global Financial Integrity (GFI), more that $1 trillion may have flowed out of Africa illegally over the last decade. Most of this loss is due to tax evasion by multinational companies, most is deposited in western financial institutions. This scourge eats into African economies and the tax base that should be a broad source of resources for development. GFI calls on the G20 to crack down on this illicit practice. (The Guardian)
"Strictly Confidential" Report by IMF on Financial Transaction Taxes (April 2010)
The G20 is currently discussing different ways to recuperate public funds spent on bank bailouts in the recent global crisis. This discussion has given rise to the possibility of a Financial Transaction Tax (FTT), long advocated by NGOs because it would create vast public revenues and restrain speculation. However, in this paper the IMF expresses little enthusiasm for the FTT advocating for a temporary flat tax of bank holdings instead. The publication shows the IMF's dedication to avoid game-changing reforms of the financial sector, and signifies the still powerful role of the IMF in global policy making. (IMF)
Europe Dithers on 'Tobin Tax' (March 25, 2010)
The European Parliament adopted by a wide margin a resolution calling on the European Commission to develop a plan for an EU-wide financial transaction tax (FTT). But in a sign that the Parliament is not the master of policy in the post-Lisbon environment, a recent meeting of EU leaders failed to take a decision on the matter, issuing only a lukewarm statement about the need to reach agreement before the G-20 summit in June. Some European governments see FTTs as a new revenue source for their general budgets or as a means to strengthen the public treasury after the billions spent on bank bailouts and stimulus packages, but others (such as the UK) are adamantly opposed. NGO campaigners see the tax as a potential multibillion euro source for development assistance, climate response and other public priorities. (IDN)
A Tobin Tax? The Outré is Back in (February 5, 2010)
Finance ministers of the G7 who recently met in Canada had an unusual item on the agenda – a tax on international financial transactions. This tax could help stabilize markets and raises substantial public funds. Governments are not agreed, however, on how such revenues would be used, or who would be in charge of spending. But the proposal has come a long way in a short time, boosted by government fears and revenue needs arising from the economic crisis. (Globe and Mail)
2007
One Answer to Global Warming: A New Tax (September 16, 2007)
This New York Times article argues that both US Democrats and Republicans could support global taxes on carbon emissions. Opponents of carbon taxes have argued that such a tax would cause excess harm to private consumers, and disproportionately impact the poor. The author suggests, however, that the tax revenues can be used to reverse the effects on the poor. Proponent suggest a carbon tax allows the world's governments to take a long-term perspective on climate change and the future needs of poor economies in a way that the competing cap-and-trade system does not allow.
Time to Tax the Carbon Dodgers (April 5, 2007)
This BBC commentary calls for a tax on exports from wealthy countries – such as the US and Australia – that have refused to sign the Kyoto Protocol. The author argues that the tax would encourage these governments to "develop responsible climate policies" and could "redress the balance" of production costs between countries that pay for their CO2 emissions and those that "won't take climate change seriously."
2006
Fraction of Oil Profits Sought for Poorest Nations (August 24, 2006)
The UN Under Secretary General for Least Developed Countries (LDCs) suggested that oil-producing nations should donate ten cents per barrel for infrastructure in LDCs. Among the reasons cited, the UN official listed growing oil profits, under-funded development projects and increasing poverty in many LDCs. Still, Anuradha Mittal of the Oakland Institute cautions against over-anticipation of increased aid, mentioning that 17 of the 22 richest countries give less aid than the UN-proposed 0.7% of gross national product. (Inter Press Service)
UN Struggles to Find a Voice on Global Taxation (August 21, 2006)
Embodied in a strongly oppositional letter from the Senate leadership to the US President before the 2006 G8 meeting, US hostility towards global taxation intensifies. While the conservative group America's Survival warns that the UN actively plans to introduce a global tax, Global Policy Forum's Katarina Wahlberg stresses that, so far, talks on global taxes have taken place primarily outside the UN. According to Wahlberg the US opposition reflects resistance to a more independent UN. (Tax Notes International)
Brasilia Conference, 6-7 July 2006: A Continuing Dynamic Process (July 26, 2006)
This Stamp out Poverty & World Economy, Ecology & Development paper reports on the Brasilia follow up conference to the "Paris Ministerial on Innovative Financing for Development." Since the Paris meeting, five more countries have joined the Air Ticket Levy (ATL) and the group will launch the "International Drug Purchasing Facility" at the 2006 General Assembly high-level meeting. The authors further report on continued support for a currency transaction tax (CTT) making the time ripe for a "pilot CTT." The report expresses concern that several Northern European countries are not participating sufficiently in the alternative financing process, and that some governments may use revenues for non-developmental purposes.
The Brasilia Conference on Innovative Financing Mechanisms - Report of the Conference in Brasilia, Brazil (July 6-7, 2006)
This paper from the Friedrich Ebert Foundation analyzes the main outcomes of the Brasilia follow-up conference to the "Paris Ministerial on Innovative Financing for Development." The author commends the conference's additional momentum on alternative financing. He further highlights the strong NGO presence at the conference, which ensured that "government representatives were exposed to the full menu of options for additional financing mechanisms." But the paper also reports on NGO regret that governing structures of the "International Drug Purchasing Facility" remain undefined. Moreover the intergovernmental initiative fails to recognize how intellectual property rights impede drug sale in poor countries.
Plenary Session of the Pilot Group on Innovative Financial Mechanisms, Brasilia, (July 6-7, 2006)
Representatives from forty countries along with international and nongovernmental organizations gathered in Brasilia to discuss alternative development financing as a follow-up to the Paris Ministerial held in March. This chair's summary reports that countries are making progress on the Airline Ticket Levy and the International Drug Purchase Facility. Also participants discussed tax evasion with several proposing a specific conference on the topic. The chair further notes a broad consensus on the need for "civil society" participation in the governance of these initiatives. (Leading Group on Solidarity Levies to Fund Development)
From Concept to Reality: On the Present State of the Debate on International Taxes (June 2006)
Global taxes can both generate revenue and have a regulatory effect. This report discusses the possibility of an international tax- for example on currency transfers, airline tickets, or carbon emissions. Each country could use the tax revenues towards health, environmental, or otherwise related global initiatives. This added source of income would assist in reaching the Millennium Development Goals and improving the worldwide standard of living. (Friedrich Ebert Foundation)
Innovative Sources of Finance after the Paris Conference (April 2006)
With France and Chile implementing air-ticket taxes in 2006, the Friedrich Ebert Foundation provides an overview of the Paris conference outcome. Apart from the air-ticket tax, the report also analyzes other initiatives to raise additional money for development. A group of rich countries will set up an International Finance Facility (IFF) to frontload aid for immunization. But, unlike taxes on currency trade and carbon emissions, the IFF initiative will not increase development funds in the long term, nor will it have any positive spill-over on the international financial system or the environment.
2005
International Taxation: Regulating Globalisation – Financing Development (May 2005)
This World Economy, Ecology and Development (WEED) paper discusses international taxes and their roles in "regulating and shaping globalization." Arguing that the taxes are "necessary and realistic," the study examines vital developments towards global taxes, including Belgium's adoption of the currency transaction tax and the French-Brazilian initiative to promote global taxes to finance development.
Development Committee Communiqué (April 17, 2005)
The Boards of Governors of the World Bank and the International Monetary Fund affirmed their support of the Millennium Development Goals. In this document they express their will to discuss "the most promising nationally applied and internationally coordinated taxes" at the annual meetings.
New Resources of Financing for Development: A Review of Options (April 5, 2005)
This working paper from the European Commission discusses taxes on air fuel, flight departure and currency trade. While global tax supporters often emphasize that the tax revenue should be additional to increases in Official Development Assistance (ODA), this paper suggest that such taxes could in fact finance ODA.
