Global Policy Forum

By Katarina Wahlberg

I will summarize some of the less known proposals of global taxation that we have not talked about here today. These proposals have come from various places and have been suggested for various purposes. For example to raise revenue for the United Nations or to limit pollution.

Many of these alternative financing schemes were proposed in the report of the Commission on Global Governance, "Our Global Neighbourhood", as a means to raise revenue for the UN. Several alternative financing proposals were also researched by Hans d'Orville and Dragoljub Najman, "Towards a New Multilateralism: Funding Global Priorities – Innovative Financing Mechanisms for Internationally Agreed Programmes" (1995). And by Erskine Childers with Brian Urquhart, "Renewing the United Nations System".

It is true for most of these proposals that, while some research has been done, little concrete action towards their implementation has been taken. Before continuing, I will organize the various forms of alternative financing into three broad groups:

1. The currency transaction taxes or the Tobin tax
2. The taxes on the use of part of a Global Common. Most of these financing proposals serve also to preserve the environment through e.g. taxing Aviation Fuel or charging for Ocean, Non-Coastal Fishing.
3. Taxes beyond the Global Commons, such as a tax on Conventional Arms Trade and the creation of a UN Global Lottery.

I would like to stress that there are many more proposals for global taxes than I will discuss here today.

TAXES ON GLOBAL COMMONS

Air Fuel
Air transportation is a major consumer of fossil energy and emitter of greenhouse gases. There is mounting evidence that the emissions of aircraft at high altitude flights contribute to the degradation of the ozone layer. Although airplane travel only accounts for 3% of global carbon emissions, it is the fastest growing source of emissions and is expected to triple by 2015. Currently airline fuel is the cheapest in the world, as the industry is exempted from fuel taxes. This encourages excessive air travel and puts other less polluting forms of transportation like rail at a competitive disadvantage.

A tax on aviation fuel would make air travel more expensive, and thus dampen the growth rate in international air traffic. A tax would encourage the use of fuel-efficient engines to reduce damage to the atmosphere. It is estimated that a tax of approximately 3.65 US dollars per 100 flight kilometer would yield annually approximately 74 billion US dollars.

International Airline Tickets
Another tax related to air travel is the tax on Airline Tickets for use of congested flight lanes. The main purpose of this tax is obviously to prevent climate change. According to some calculations, a 1 % charge on all air passenger tickets issued in 1989 would have generated about 1 billion dollars, 75 % of this sum would have been contributed by airlines from the seven major industrialized countries.

It should be borne in mind however that a large number of countries, especially in the developing world, are already using departure taxes as significant revenue raisers and might be reluctant to see this source of finance preempted by an international charge or tax.

International Sea Travel
Similarly, a tax on International Sea Travel has been proposed to reflect the need for ocean pollution control and for keeping sea lanes open to all legitimate users. Special fees (or auctions or licenses) for maritime dumping of waste where the level of toxicity does not require outright prohibition.

Ocean, Non-Coastal Fishing
User Fees for Ocean, Non-Coastal Fishing The tax would ease the pressure on many stocks and finance research and surveillance.

Antarctica
Special user fees for activities in Antarctica, such as fishing, to fund conservation on the basis that the continent is part of the common heritage of humanity.

User Fees for the Seabed

Electromagnetic Spectrum and Geostationary Satellites
The electromagnetic spectrum is another element of the global commons. The idea is to charge for user rights of the Electromagnetic Spectrum through the International Telecommunications Union (ITU), a specialized agency of the UN. The ITU carry out the regulatory process of registration of frequency assignments and satellite orbits. The allocation of frequency bands is done essentially free of charge. If the ITU could sell rather than allocate frequencies to Governments some revenue would be raised. It would then be up to the Governments to auction the frequencies to commercial companies or allocate them in a different way.

Similarly, it is possible to introduce a charge for the launching of satellites into the earth orbit and thereafter impose annual or monthly parking fees.

TAXES BEYOND THE GLOBAL COMMONS

Conventional Arms Trade
Since the 1970s it has been suggested in various fora – and increasingly so after the end of the Cold War – that a tax be levied on international arms transfers for the purpose of raising funds for development or to be used to finance international peacekeeping. Such a tax would also serve to decrease international arms trade. The base for taxation would be an already existing Register of Conventional Arms, established by the General Assembly in 1991. This Register contains data on state-to-state imports and exports of conventional arms. However using it as a base for taxation could be problematic since

1. Reporting to the register is voluntary.
2. Only government-to-government transfers are reported, while the growing private arms market remains outside the reporting system.
3. The register only provide information on the number of items traded but not on their monetary value. It would thus be difficult to determine the size of the tax.
4. The register does not report arms deals involving military hardware produced jointly by several countries, which has become an increasingly important feature of the market. (e.g. for tanks and fighter planes.)

Thus, a first step towards implementing a tax on arms transfers would be to modify this register and deal with the issues I just mentioned.

UN Communication Day
A proposal which was put forward to raise revenue for the UN is to designate one day in each year as "UN Communication Day", when all postage charges and telephone calls (and a fraction of broadcasting advertising revenues) would carry levies accruing to the UN – or other development or environmental uses at the global level.

Global Lottery
One alternative financing proposal with more direct and voluntary citizen participation, is to set up a Global Lottery. One advantage with this scheme is that it does not require unanimity among all states, instead a few countries could start of the process.

International Travel and Travel Documents
A stamp tax on international travel and travel documents was recommended by the Secretary General in his Agenda for Development.

Email
A tax on emails was proposed in an UNDP Human Development Report in 1999. The report proposes a "bit tax" - a very small tax on the amount of data sent through the Internet. Sending 100 emails a day, each containing a 10-kilobyte document, would raise a tax of just 1 cent. Yet with email booming worldwide, the total sum would be substantial. Globally in 1996, such a tax would have yielded $70 billion - more than total official development assistance that year. The UNDP report suggested that the revenue raised would fund the global communications revolution to ensure that it is truly global.

However, only a few days after this report was released and after heavy opposition from the US Congress, the UNDP distanced itself from this proposal, claiming that in fact it was only an idea –not a proposal-, that was included in a report which is an independent publication with editorial policies separate from UNDP.

CONCLUDING REMARKS

Of the proposals that I have mentioned here, larger income possibilities lies with proposals of taxing airline travels or e-mailing. However, these proposals are likely to encounter more opposition from member states.

Many of the more discrete, smaller scale proposals such as satellite licensing and user fees for activities in Antarctica, would raise almost no income in the medium term. However they may be important income sources in the long term. Moreover, since these taxes do not challenge any major interests they are probably easier to implement. In turn their implementation could perhaps pave the way for the implementation of more controversial taxes, such as the Tobin tax, making them less revolutionary.