The United Nations Department of Economic and Social Affairs Thursday proposed introducing an international tax and other financing mechanisms, including a 1% tax on individuals with holdings over one billion dollars, to raise money for critically underfunded international development programs.
The 2012 edition of the World Economic Social Survey report found that donor countries have cut back on development assistance in 2011 due to economic instability, marking the first year in which international aid flows have substantially declined.
“Donor countries have fallen short of their aid commitments and development assistance declined last year because of budget cuts,” Robert Vos of the UN DESA told reporters Thursday. “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.”
Vos says the report suggests improvements to existing funding initiatives and takes a careful look at which mechanisms could be used to effectively channel additional funds required for development needs.
He says the international taxes, which would be a coordinated tax on carbon emissions, air traffic and financial and currency transactions, could serve as an innovative mechanism to complement government commitments to development aid. The United Nations Department of Economic and Social Affairs estimates the proposed international taxes could raise more than $400 billion annually.
In addition to international taxes on consumption, the survey also suggests a billionaire’s tax, which would require individuals to pay 1% of their wealth holdings of $1 billion or more to finance international development.
“It makes economic sense to have tax on consumption behavior. It helps stimulate green growth and mitigate financial market instability.” Vos said. ”These are just proposals so it’s difficult to see when they could be implemented but it’s important to emphasize that the time is more right now than it was in the past to discuss these mechanisms.”