Blogs

The G20, Innovative Finance, and Development

Ashton Wingate — April 25, 2011 – 2:14 pm

In recent months, advocates across sectors have come together to push for an international solidarity tax to fund development, curb financial speculation, and reduce national deficits. As the world recovers from the financial crisis on shaky ground, advocates and policymakers alike are (or ought to be) putting their energy around how to sustainably and equitably rebuild our economies without sacrificing global commitments around the Millennium Development Goals and reaching the official development assistance (ODA) target of 0.7% of GNI committed to ODA.[1]

Significant momentum has been generated this year around instituting a financial transaction tax (FTT) which would place a small tax on a variety of financial transactions. The tax could serve two purposes: firstly, to raise revenue to finance development, climate change, and close domestic budget gaps; secondly, to deter the excessive speculation that caused destabilizing conditions leading to the global financial crisis, disproportionately impacting poor and lower income families worldwide. On the revenue side, a global FTT could raise as much as $30 billion per year.[2]

Recently, FTT advocates used the opportunity of the G20 Finance Ministers meeting in Washington, D.C. in mid-April to raise the importance of the FTT. During this week of meetings , which coincided with the Spring meetings of the World Bank and IMF, advocates were successful in generating some attention around the FTT.

This included: Delivering a sign-on letter endorsed by more than 1,000 international economists, including Jeffrey Sachs and other prominent economists, to the G20 Finance Ministers on the feasibility and importance of an FTT[3]; and working with the French Embassy to secure the French Development & Cooperation Minister, Mr. Henri de Raincourt as a lead speaker in an event titled “Meeting Needs of Developing Countries: The Role of Innovative Financing”.[4]

ACTION partners and allies in France have been especially active in promoting the FTT, building off of e French government’s support of the tax.

For more information on ACTION’s work on the FTT, please contact Alison Root at aroot@results.org.

Please find a summary of the FTT here: http://www.ips-dc.org/articles/financial_transaction_taxes_and_the_global_south

[1] OECD, “The 0.7% ODA/GNI target - a history” http://www.oecd.org/document/19/0,3746,en_2825_293564_45539475_1_1_1_1,00.html

[2] CSIS, Innovative Financing Workshop, Remarks by Henri de Raincourt http://csis.org/files/attachments/110415_Raincourt_speech.pdf

[3] The Guardian, “Robin Hood tax: 1,000 economists urge G20 to accept Tobin tax”

http://www.guardian.co.uk/business/2011/apr/13/robin-hood-tax-economists-letter

[4] CSIS, Meeting Needs of Developing Countries: The Role of Innovative Financing. https://csis.org/event/meeting-needs-developing-countries-role-innovative-financing