At U.N. MDG Summit, Ministers Will Propose World Currency Tax To Fund Development Aid
“A group of 60 nations, including France, Britain and Japan, will propose at the U.N. [summit on the Millennium Development Goals (MDGs)] this month that a tax be introduced on international currency transactions to raise funds for development aid, ministers said on Wednesday,” Reuters reports (Irish, 9/1).
Ministers estimate the proposed “0.005 percent [tax] on currency transactions” could “raise as much as $35 billion a year in development aid,” according to BusinessWeek (Viscusi, 9/2). “The global aid gap is estimated at $340 billion a year between 2012-2017, including $156 billion for climate change in poor countries and $180 billion for public development,” Reuters continues (9/1).
The tax “is not much, but it is enough to launch the movement,” France’s Foreign Minister Bernard Kouchner said during a press conference in Paris, where he hosted a meeting of officials representing 12 countries “to review expert advice on the initiative on behalf of the 60 nations involved,” Agence France-Presse reports (9/2).
During the meeting in Paris this week, the leaders “discussed the follow-up to the expert report that they requested in October, â€¦ which confirms the technical, legal and economic feasibility of a tax on financial transactions in support of development,” according to the Embassy of France. Reviewing the report, “[t]he ministers recalled the long-standing challenge of financing basic needs such as access to water, food security, education, and health,” the Embassy of France adds (9/1).
The report produced by the group of international experts appointed last year by the 12 countries leading the project “said the currency tax [is] the preferred solution,” according to Reuters. The report “also gave other options, including a financial sector activity tax, a value-added tax (VAT) on financial services, a broad financial transactions tax and a nationally collected single currency transaction tax,” the news service adds.
The 60 nations behind the tax include “most European countries and Japan though not the U.S. or Switzerland. The group’s report will be presented at a Sept. 21 session of the United Nations general assembly,” BusinessWeek adds, noting the history of the global debate overÂ taxes to aid in developmentÂ (9/2).
Reuters also notes the reluctance thus far of some countries, such as the U.S., to back a global currency tax: “Critics have said that any tax would only be feasible if all the world’s main financial centers agreed to levy it. Until now there is no sign that the United States is remotely interested.”
The news service continues, “‘The Americans are extremely important in this, but we are not alone,’ Kouchner said, adding that the tax could possibly go ahead with just the 60 nations behind it.” Reuters adds that many details of the project remain unresolved, including “who would receive and allocate the revenue and for what projects.”
“If the political will is there, it could be done within 2-3 years,” Belgium’s Development Cooperation Minister Charles Michels said, according to Reuters. The article also quotes Spain’s Secretary of State for International Cooperation Soraya Rodriguez (9/1).