NEW YORK, September 16 (C-FAM) – Sixty nations will present a declaration to implement an international currency transaction tax during the UN Millennium Development Goal (MDG) summit that begins next week at United Nations headquarters in New York. As members of the Leading Group on Innovative Financing for Development, these nations will propose a tax they contend is necessary to bridge alleged funding gaps for the MDGs. Estimates judge the gap in development financing to fall between $324-336 billion a year from 2012 to 2017.
Since its inception in 2006, the Leading Group has promoted what it calls “innovative development financing” that seeks to redistribute wealth on a global scale. The Leading Group’s Taskforce on International Financial Transactions Declaration of last December states, “In order to support the achievement of the Millennium Development Goals (MDGs) and other internationally agreed development objectives, development financing must be improved through innovative mechanisms to ensure stable, predictable flows that are complementary to traditional assistance.”
Heads of the Leading Group including Japan, Belgium, and France met in Paris two weeks ago to discuss an expert report on innovative financing issued earlier in July. The report was commissioned by their taskforce last October to assess the technical, legal and economic feasibility of a global tax for development. The report maintains that a “global solidarity levy” is the best solution for development funding, since it is the “most appropriate source of revenue to fund public goods and share the wealth generated by globalized economies.”
The report suggests that taxing five cents for each $1,000 exchanged could bring in more than $30 billion per year. It also eyes the financial sector as the solution to the world’s development funding problems while blaming the sovereign debt problem, especially in Europe, for undermining the ability of governments to meet their promised contributions.
The European Union has adopted the international tax for development cause and now wants push it in the global arena at the UN. The draft of the outcome document for the MDG Summit already makes note of the Leading Group and its taskforce, and adopts the same goals to find stable and sizeable sources of income for development projects. Thus far, the United States and Switzerland stand in opposition to the idea. Global tax proponents have remarked that U.S. support is vital in order to make it happen.
Michael Miller, an expert on poverty solutions and economic development at the Acton Institute, criticized the global solidarity levy saying, “It is based on a classic misunderstanding about the nature of wealth creation and is a frenetic last-ditch attempt to salvage the MDGs. People in the developing world are treated like experiments for bureaucrats to play with redistributionist models.”
“Africa doesn’t need handouts or to have their markets flooded with aid that drives down the value of their own products,” Miller stated, “If wealthy countries really want to help developing countries, why don’t they open up their markets to competition and stop heavily subsidizing agriculture?”