UN plans tax on carbon dioxide emission
The United Nations has proposed tax on carbon dioxide emissions in developed countries and currency transaction tax to raise 400 billion US dollars annually for development needs.
Rob Vos, lead author of “World Economic and Social Survey 2012: In Search of New Development Finance’’, said this at a press conference at the UN Headquarters in New York.
He said the proposal was part of series of financial mechanism to help the organisation.
According to him, these measures will yield substantial revenues of 250 billion dollars, 40 billion dollars and 71 billion dollars per year, respectively, for international co-operation.
“Such taxes also make economic sense, as they help stimulate green growth and mitigate financial market instability. In short, such new financing mechanisms will help donor-countries overcome their record of broken promises to benefit the world at large,” says Rob Vos who serves as the Director of Department of Economic and Social Affairs- DESA’s Development Policy and Analysis Division.
He said that DESA, a Financial Transaction Tax (FTT), would also help to reduce the profitability, and thus the volume, of computer-operated high-frequency trades which he said could be disruptive to equity markets.
The author said that the tax would not be felt by non-financial customers and would fall on a sector that was not heavily taxed already.
Vos said that the financial mechanism became necessary as many donor-countries have cut back their assistance funding due to the global economic crisis.
In his words, “Donor-countries have fallen well short of their aid commitments, and development assistance declined last year because of budget cuts, thus increasing the shortfall to 167 billion dollars. 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 co-ordinate taxes on carbon emissions, air traffic, and financial and currency transactions”.
Vos stated that the global body found out that development aid declined in real terms in 2011, thus highlighting the need for additional and more predictable financing from new sources.
He explained that while existing initiatives to fund programmes in the developing world have been successful, there was need to scale up or replicate them.
Vos said this was too limited to meet the needs for developments financing in the next coming decades, emphasizing that new funding sources needed to be tapped into.
“The FTT is a progressive tax in as much as poor people engage in relatively few transactions with financial institutions and the rich engage in many,” DESA stated in a briefing note on the potential of FTTs.
“Financial and currency transaction taxes are technically feasible and economically sensible. They could readily provide the means of meeting global development financing needs,”he said.
According to him, the current financing resources in many low-income countries have focused on allocating funds to fight specific diseases such as HIV, tuberculosis and malaria.