MONTREAL, Oct. 24, 2013 /CNW Telbec/ - Bono, the popular leader of the
U2 rock band, recently said that he was aware that international aid
only has a limited impact on the fight against poverty, as opposed to
trade and entrepreneurial capitalism. Meanwhile, international
bureaucrats are still busy crafting new taxes for development
assistance. In 2000, the United Nations Development Programme started
talking about Innovative Financing for Development (IFD), a complex set
of spending projects and organizations in the field of development
assistance that are to be funded mostly by new taxes.
In a research paper unveiled today by the Montreal Economic Institute
(MEI), economists Youri Chassin and Pierre Lemieux are unequivocal:
"IFD taxes combine nearly all the possible flaws a tax can have, both
politically and economically."
"The institutions that are currently advocating for new taxes simply
want to secure a new source of revenue for themselves. It should not
come as a surprise that organizations that have received IFD funding
subsequently increased their operating costs," states Mr. Chassin. For
instance, the Global Alliance for Vaccines and Immunisation (GAVI) more
than doubled its number of employees, who now enjoy an average
remuneration of US$199,000 per year.
The tip of the iceberg
Canada and the United States have so far resisted this trend, but the
citizens of other countries are not so lucky. A tax on airline tickets
is currently being levied in France—the "taxe Chirac"—and a few other
countries, ranging from US$1 to US$40 per ticket. In Germany, a 15% IFD
tax is applied to carbon dioxide emission permits earmarked for climate
protection in developing countries.
These taxes each raise about US$200 million a year. More "solidarity"
IFD taxes are currently being proposed, such as financial transaction
taxes, carbon taxes and tobacco taxes.
A serious lack of transparency and a net loss
"These IFD taxes, current and planned, are worrisome because they are
hidden and complicated. Taxpayers are unaware that they are paying
them, and even less aware of what the taxes are supposed to pay for.
Even the governments that implement the taxes are unsure," continues
For instance, both the WHO and UNICEF, which benefit from the money
raised by the French airline ticket tax, refused to allow the French
government's auditor access to their internal audits. The French
auditor, who was thus unable to carry out a full audit, raised
questions about the lack of transparency of international
"Even if you believe in development assistance, IFD taxes are an
inefficient way to do it because the small benefits to developing
countries do not exceed the costs of the measures. This situation
causes a net loss", explains Mr. Chassin. The authors based this
conclusion on a thorough analysis of IFD taxes on the basis of Nobel
Prize Laureate economist Joseph Stiglitz's criteria of a "good" tax.
The research paper entitled Why New International Taxes for Development Are Inefficient was prepared by Youri Chassin with the collaboration of Pierre Lemieux,
respectively economist and senior fellow at the Montreal Economic
Institute. This publication is available at www.iedm.org/e.
The Montreal Economic Institute is an independent, non-partisan,
not-for-profit research and educational organization. Through its
publications and conferences, the MEI stimulates debate on public
policies in Quebec and across Canada by proposing wealth-creating
reforms based on market mechanisms.
SOURCE: MONTREAL ECONOMIC INSTITUTE
For further information:
Ariane Gauthier, Montreal Economic Institute
1-514-603-8746 | Email: email@example.com