Small global taxes would make a big difference for world's 'bottom billion'
France's Bernard Kouchner, Japan's Katsuya Okada, and Belgium's Charles Michel discuss innovative financing to fund development projects that will help lift up the world's poorest people.
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As a concrete step toward this aim, we established the Taskforce on International Financial Transaction for Development in October 2009 with the objective of coming up with a shared analysis of what is feasible, and making concrete, realistic proposals.Skip to next paragraph
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We approached the top specialists – legal scholars, economists, researchers, and even bankers – to analyze the different options. They proposed several different mechanisms for levies on financial transactions, including on foreign exchange movements (currency transaction development tax).
Their work is now available in a solid, well-documented report. This report assesses technical issues in a comprehensive manner and provides estimates on tax revenues. The report mentions that a levy of five cents for each $1,000 exchanged could bring in more than $30 billion per year. It supplements and updates other analyses carried out regularly over the years by the UN, the European Commission, and the Landau Report. It also offers us common ground to discuss innovative financing, and has started to play a significant role in evoking greater international discussion.
The report and other sources mention that with financial flows up sevenfold since the beginning of the decade, the financial sector is one of the main beneficiaries of global economic growth, and the volume of foreign exchange transactions worldwide is about $3.6 trillion daily, so the volume of all transactions (stocks, bonds, derivatives) is even higher ($210 billion daily for bonds and $800 billion for stocks).
What should be done with the revenues mobilized by innovative financing, and how?
Toward 2015, the target year of the MDGs, we must provide safe water for a billion people; enough food for a billion people; appropriate treatment for major pandemics; education for children.
For approaching these goals, we should not be inward-looking. We need to have sympathy, as fellow human beings, for people who are struggling throughout the world and extend support for developing countries.
We cannot just only rely on the traditional ODA. The real challenge today is designing an innovative mechanism based on strict governance and allocation criteria. It is time to act, and to do it in an exemplary fashion.