U.N. Proposes Global Taxes to Fund ‘Global Challenges’ Such As Climate Change

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Prompting warnings of a “global governance” push, the United Nations released a report Thursday proposing mechanisms including a global carbon tax, currency transaction tax and a “billionaire’s tax,” to finance development and global needs such as combating climate change.

The U.N. World Economic and Social Survey (WESS) says such taxes could raise more than $400 billion a year, at a time when donor countries are unwilling or unable – “in the midst of difficult financial times” – to maintain the levels of development aid necessary.

“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,” said survey author Rob Vos in a statement.

“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,” he said.

“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.”

The WESS is produced each year by the U.N.’s Department of Economic and Social Affairs. Voss is director of the department’s Development Policy and Analysis Division.

The proposed mechanisms in this year’s report, entitled “In Search of New Development Finance,” include:

-- Carbon Tax: A tax of $25 a ton of carbon dioxide (CO2) emitted in developed countries would raise an estimated $25 billion a year. The money could be collected by national authorities, but be earmarked for international cooperation. CO2 is the “greenhouse gas” blamed most often for climate change.

Australia’s Labor government on Sunday launched a controversial carbon tax, charging 500 major companies $23 for every ton of CO2 emitted. The conservative opposition has vowed to scrap the measure if it returns to power at the next general election.

-- Currency Transaction Tax: A tax of 0.005 percent on all trading in four major currencies – the U.S. dollar, the euro, the yen and pound sterling – would yield around $40 billion a year for international initiatives. The decades-old idea of levying a small charge on financial transactions is sometimes called a “Robin Hood tax” since it supposedly taxes rich nations to benefit poor ones.

The European Union’s executive Commission has proposed the introduction of such a tax – 0.1 percent for shares and bonds and 0.01 percent for derivatives – in the 27-member union with effect from January 1, 2014, an initiative expected to raise just over $70 billion a year. The WESS says a portion of that could be earmarked for international cooperation.

-- SDRs: Allocation of International Monetary Fund Special Drawing Rights (SDRs) could yield $100 billion a year to purchase long-term assets that could then be used for development finance. Set up in the 1960s, SDRs are used by governments and some international institutions. It is not itself a currency, but its value is based on a basket of the dollar, euro, pound sterling and yen. Some countries, including Russia, China and Brazil, have been pushing the idea of SDRs replacing the greenback as the world’s reserve currency.

-- Billionaire’s Tax: A tax of around one percent on individual wealth holdings of $1 billion or more, “with the revenue destined to finance internationally agreed global development purposes.” The WESS says this mechanism, which it estimates could raise $50 billion a year, is an option that could be explored but needs further technical elaboration.

“Realizing the potential of these mechanisms will require international agreement and corresponding political will, both to tap sources as well as to ensure allocation of revenues for development,” said Vos.

‘Unaccountable’ taxing authority

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