"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 Rob Vos, author of the UN World Economic and Social Survey. “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 announcement follows a global acknowledgement of carbon taxation as an important instrument for the reduction of CO2 emissions while also raising revenues, which was seen at the Rio Summit on Environment and Development.
The UN wants countries to price carbon emissions at $25 a tonne.
“A carbon price of $25 would be an excellent first step and would support the achievement of carbon reduction commitments, if not secure their achievement as a stand-alone measure,” said Jacqueline Cottrell of Green Budget Europe. “To ensure an ongoing dynamic incentive for CO2 emissions reductions, the $25 rate proposed would be increased over time. Nevertheless, it represents a significant, symbolic first step.”
The UN has no power over its members’ policies, but Cottrell is hopeful.
“It would be hoped that the UN's backing of the measure will carry some weight,” she said. “Certainly it is an important development and reflects a general shift internationally towards acceptance of more innovative taxes - including carbon taxes - as a means of incentivising low carbon investment while raising revenues.”
Green Budget Europe has long campaigned for revenues raised from carbon taxation to be pumped into investment in green technology. But the UN has yet to propose that.
“If the money is to be used for development goals, then it is important that use of all revenues are subject to strict sustainability criteria,” said Cottrell. “In theory, of course, levying the tax will itself incentivise the development of green technologies and foster green innovation in those countries where the tax is levied.”
The UN expects a carbon tax on this level to raise around $250 billion a year.
It would also like to see a 0.005% FTT, which it believes could raise around $40 billion a year.
While the UN’s idea for an FTT does not go as far as the European Commission’s, which 10 countries plan to adopt, it will add weight to calls for taxing financial transactions and reflects the momentum gathering behind it as well as the direction global tax policy seems to be heading, with lower corporate tax rates and greater reliance on taxes designed to curb negative externalities.