![]() To meet budget deficits in developed countries resulting from the financial crisisĪ Financial Transactions Tax Could Raise Substantial Revenue To finance climate change adaptation and mitigation in developing countries Whereas the IMF advised Northern countries to run up large deficits to stimulate demand, it counselled Southern countries to exercise fiscal restraint even when it meant falling farther behind in achieving their Millennium Development Goals.Īdditional Resources Needed Annually over the Years 2012 to 2014 The need for these resources results, in part, from the contradictory advice the International Monetary Fund has given to developed and to developing countries facing the global crisis. Of course, that ecological debt is much broader than the “carbon debt” since it includes the exploitation of resources for hundreds of years and the assault on cultures and ways of life.īruno Jetin, an assistant professor of economics at the Université Paris Nord, calculates the additional funding needed to meet global financial obligations at US$710 billion a year from 2012 to 2014. The peoples of the global North owe a huge ecological debt to those in the global South for the overuse of the earth’s fossil fuel resources and carbon dioxide absorption capacity. In addition, the global community must take responsibility for finding ways either to reduce the severity of the effects of climate change on developing countries, or to assist them in adapting to its consequences. These eight goals, which all 192 UN member states agreed to achieve by 2015, include reducing by half the proportion of people living in extreme poverty, achieving universal primary education, improving maternal health, reducing child mortality and halting the spread of HIV/AIDS, malaria and other diseases. The crisis has driven nearly 50 million more people into extreme poverty and derailed progress towards meeting the United Nations Millennium Development Goals. Meanwhile the need for foreign assistance is greater than ever. Thus fully one-quarter of the expenditure restraint that Finance Minister Jim Flaherty says is needed to balance the budget will come at the expense of the poorest and most vulnerable people in developing countries – those who had nothing to do with causing the global crisis. The freeze on foreign aid amounts to a $4.4 million cut from planned spending over the next five years. ![]() As a result, Canada’s Official Development Assistance (ODA) is projected to fall from 0.33% of Gross National Income (GNI) to just 0.28% by 2014, putting Canada farther and farther away from the international goal of devoting 0.7% of GNI to ODA. In Canada, spending on international assistance will peak at $5 billion in 2010 and then remain frozen at that nominal amount from 2011 through 2014. At the same time, governments are facing mammoth revenue shortfalls, leading to cutbacks on expenditures, including on foreign aid budgets. Private banks have reaped huge profits by borrowing substantial sums from central banks at near-zero interest rates and lending to customers at higher rates. In order to cope with the global financial and economic crisis, governments around the world have spent trillions of dollars on bail-outs for financial institutions and economic stimulus measures. Finally it will explore how political momentum in favour of an FTT is growing in spite of the reluctance of the Canadian government to lend its support. Next it will summarize the arguments in favour of an FTT and discuss some of the most common objections to the tax. This briefing paper will first explain why an FTT is urgently needed and then situate the current debate in its historical context. Prominent economists advocate a Financial Transactions Tax as one way to cool down excessive speculation in financial markets, a principal cause of the economic crisis. Political leaders, including the presidents of France and Germany and the prime minister of Britain, back an FTT as one of the best ways to fund programs to fight world poverty, pay for climate mitigation and adaptation costs and make financial institutions pay their fair share of the costs of the global crisis which, in large part, was created by their practices. An FTT is a tiny tax on financial market transactions such as equity, bond, derivative or foreign exchange trades. A growing number of politicians, civil society organizations, economists and some financiers have become strong advocates of a global Financial Transactions Tax (FTT).
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