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UN calls for int'l tax to raise 400 bln USD annually to finance development needs

07-06-2012 01:56 BJT

UNITED NATIONS, July 5 (Xinhua) -- The United Nations on Thursday proposed an international tax, combined with other innovative financing mechanisms, to raise more than 400 billion U. S. dollars annually for development and global challenges such as fighting climate change.

The proposal was contained in the World Economic and Social Survey 2012: In Search of New Development Finance (WESS 2012) , an annual report on global development, which was launched here Thursday.

The report said that in the midst of difficult financial times, many donor countries have cut back on development assistance. In 2011, for the first time in many years, aid flows declined in real terms.

The report found that the scope of scaling up or replicating existing initiatives is too limited to meet the needs for development financing in the coming decades. Therefore, new sources will need to be tapped. Experts who carried out the survey see potential to raise more then 400 billion U.S. dollars per year through the following mechanisms:

-- a tax on carbon dioxide emissions in developing countries: a tax of 25 dollars per tonne would raise an estimated 250 billion per year, collected by national authorities, but earmarked for international cooperation;

-- a tiny currency transaction tax of one half a "basis point " (0.005 percent) on all trading in four major currencies (the dollar, euro, yen and pound sterling), which could yield an estimated 40 billion U.S. dollars per year for international cooperation;

-- earmarking a portion of the proposed European Union financial transaction tax, which is expected to raise up to 55 billion euros or 71 billion U.S. dollars, for international cooperation;

-- regular allocations of he special drawing rights (SDRs) of the International Monetary Fund (IMF) and use of "idle" SDRs could yield about 100 billion U.S. dollars per year for the purchase of long-term assets which would then be used as development finance.

The survey said that such mechanisms are technically feasible and economically sensible. They could readily provide the means of meeting urgent global development financing needs.

"Realizing the potential of these mechanisms will require international agreement and corresponding political will, both to tap resources as well as to ensure allocation of revenues for development," Rob Vos, the lead author of the new survey, said at a press conference to launch the report.

The financial needs of developing countries have long outstripped the willingness and ability of donors to provide aid, the report said.

The report found the necessary resources to achieve the Millennium Development Goals, a set of eight anti-poverty targets to be reached by its deadline 205, and meet other global challenges, such as addressing climate change, will be tough, especially for least developed countries.

The need for additional and more predictable financing has led to a search for new sources -- not as a substitute for aid, but as a complement to it. A number of innovative initiatives have been launched during the past decade, mainly to fund global health program aimed at providing immunizations, AIDS and tuberculosis treatments to millions of people in the developing world, the report said.

The UN survey said that while these initiatives have successfully used new methods to channel development financing to combat diseases, they have hardly yielded any additional funding on top of traditional development assistance.

"Donor countries have fallen well short of their aid commitments and development assistance declined last year because of budget cuts, increasing the shortfall to 167 billion dollars," Vos said. "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 coordinated taxes on carbon emissions, air traffic, and financial and currency transactions," Vos said. "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 their own benefit to the world at large," he said.

Meanwhile, the UN report also suggested other options could be explored but would require further technical elaboration, such as a billionaire's tax, which would consist of a small tax of, say, one percent on individual wealth holdings of 1 billion U.S. dollars or more with the revenues destined to finance internationally agreed global development purposes.

"The need for additional and more predictable development financing has led to a search for alternative, innovative sources, " UN Secretary-General Ban Ki-moon wrote in the preface of the survey. "A number of initiatives have been launched during the past decade, most of which have been used to fund global health programs that have helped to provide immunizations and AIDS and tuberculosis treatments to millions of people in the developing world."

"While these initiatives have successfully used novel methods to channel development financing, they have not yielded much additional funding, thus leaving available finance well short of what is needed," Ban said.

"To date, the promise of innovative development financing is, by and large, unfulfilled," Sha Zukang, the UN under-secretary- general for economic and social affairs, wrote in the overview of the report. "Financing gaps remain large, especially with respect to supporting development, including achieving the Millennium Development Goals, and in providing global public goods, as for health and climate protection."

Editor:Wang Chuhan |Source: Xinhua

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