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Many developing countries and particular those in Sub Saharan Africa were suffering from excessive repayments on debt and it was estimated that only 10 developing countries were receiving 70% of the Foreign Direct Investment (FDI). There is no evidence to suggest that this FDI has supported sustainable development.
Since 1997, the increase in FDI has fallen considerably and although there has been some progress in debt relief and a small upturn in ODA, there is a great need for new financial mechanisms to be utilised to support sustainable development.
Most of the ideas to be discussed at the Earth Summit in 2002 will require money to achieve them. In fact, sustainable development is only one set of the many competing new demands for international money.
SOLUTIONS
The preparations for Earth Summit 2002, key finance meetings at the CSD in 2000, the Financing for Development Special Session in 2001 and the third Financing LDCs conference in late 2001 offer the opportunity required to discuss in particular issues such as NMFs.
In an ideal world, we would all be concerned with the state of the global commons to create and sustain a livable world. New forms of resource generation including taxation and tax shifting are needed, which might be collected nationally but which would be available for collective use. In this regard, we must better access resources that are available for sustainable development. Many of these ideas relate to other global objectives; the recommendations here concentrate primarily on ways of raising money for sustainable development.
Obviously, a new tax or revenue stream should be cheap, easy to collect, and difficult to evade. It should be neutral in its impact on market incentives and on income distribution unless it is deliberately designed (like tobacco taxation or progressive income tax, for example) to influence consumption or to redistribute wealth. Priority should be given to a tax which discourages inappropriate consumption, excessive control of resources, environmentally damaging activities and social inequities.
Most of the ideas for global taxation fall into three groups. The first group consists of various forms of taxation on financial transactions. As short-term transactions have proven to have destabilizing effects not fostering sustainable development, the suggestions below should be endorsed at this CSD, with a concrete time frame for an international implementation.
The second group tries to exploit a hitherto-untapped source of revenue which no nation-state already "owns". The most-discussed example of these "global commons" is deep-sea mineral mining outside territorial waters.
The third consists of attempts to get sovereign states to dedicate some part of their present national tax base to global purposes, in the same way that the European Union has an automatic right to part of the yield of VAT in member countries.
THE WAY FORWARD
The CSD NGO Finance Caucus calls for the Financing for Development High-Level
Event in 2001 to further investigate the following suggestions for
global revenue. It should be accepted that any such mechanisms that
impact adversely on developing nations or Indigenous Peoples should be
avoided.