Jayant Sinha Expresses Disappointment on FfD Not Delivering on a Global Tax Body
Ajay k Jha, 15th
July, Addis Ababa
In the 3rd
Conference on Financing for Development (FfD), Indian state minister for
finance Mr. Jayant Sinha expressed deep disappointment over the Conference not
taking up the issue of an intergovernmental tax body, which India espoused
strongly on behalf of the G-77. He hailed 3rd Conference on FfD as landmark
event and the SDGs as being ambitious and extensive scope and for their depth
to address “poverty, which remains the single largest challenge for the
humanity.”
The Minister also
said that India’s development agenda is very similar to the SDGs and that
India’s vision of development is the development of the antyodaya or the
poorest of the poor.
World leaders are
meeting here at the Ethiopian capital at Addis Ababa from 13th to 16th July to
discuss how sustainable development goals, which have high priority on the post
2015 development agenda of the United Nations can be financed. In September this
year, the United Nations and the international community will adopt the
Sustainable Development Goals during the United Nations Summit on Sustainable
Development. The SDGs are a set of 16 goals and indicators having been arrived
at through an intergovernmental process since Rio+20 Conference on Sustainable
Development.
The Conference on
financing for development begins on a note of failed promise of the developed
world to provide 0.7% of their Gross National Income to the poor and developing
countries (known as the overseas development assistance or the ODA) in the spirit
of international solidarity, as decided in the Mexican town of Monterrey in
2002. The second Conference on financing for development at Doha held in 2008
strengthened this call, however, till date developed countries have been able
to allocate only 0.29% of their GNI (USD 135 Billion) to the poor and
developing countries in 2014. The ODA target of 0.15-0.20% to the LDCs dropped
by 15% to USD 25 billion. Among the developed countries only 5 including the
Denmark, Luxemburg, Norway, Sweden and the UK have met their ODA targets. Only
few of the 70 odd High Income Countries provide ODA, some other developed
countries do provide some development assistance, but authentic data on these
development assistance remains difficult to find and much of these also include
humanitarian assistance and climate finance, which should have been in addition
to the development assistance, which need to focus on poverty eradication as
committed earlier.
While for the poor
and developing countries the conference is an opportunity to mobilize
commitments of rich and developed countries for providing finance, technology
and capacity building assistance for a sustainable and low carbon development
pathway; in contrast for developed countries the conference turns out to be an
opportunity to ho to repudiate their earlier commitments. The entire debate on
the SDGs and post 2015 development agenda of the United Nations has been
characterized by deep differences between developed and developing countries
represented by G-77 and China. While developed countries have insisted that
financing development is primarily the responsibility of respective countries
and they should increase their GDP tax ratio and strengthen South-South
cooperation and attract private finance. They also insist that ODA should be
directed to leverage private finance towards sustainable development. However,
in contrast, developing countries have been shrilling their demands to
developed countries to fulfill their ODA commitments, plug loopholes in
taxation and illicit financial flows from developing countries, technology and
capacity building cooperation, and climate finance, which they insist is in
accordance to the historical responsibility of the developed countries also
known as common but differentiated responsibility or CBDR. However, despite
these demands, the outcome document of the Conference is highly skewed in the
favour of developed countries with little reference to the issues critical for
developing and poor countries except a half hearted Technology Facilitation
Mechanism body at the UN. G-77 and India faces increased pressure from the US,
EU and the host Ethiopia to accept the outcome document, (as it is) in order to
save the Conference from an obvious failure.
The sticking point
in the negotiations is that while developed countries want developing and
middle income countries to increase their domestic resource mobilization and
enhance institutional capacity to increase their GDP tax ratio, they fail to
acknowledge that it is not possible without plugging the loopholes in taxation
and illicit financial flows from developing and poor countries to rich
countries. According to an estimate against the USD 135 Billion of ODA, the
capital flight from the third world to the developed world runs into Trillion
Dollars in forgone taxation to the big TNCs, trade mispricing and illicit
financial flows. India have been championing a demand for intergovernmental tax
body, which should allow the international taxation rules to be made by member
countries rather than under the domination of the OECD and other developed
countries, however reportedly it might have to compromise its stance under the
international pressure.
With the end of the
Conference coming closer and no sight of developed countries committing to
fulfill their ODA commitments and shortfalls, the Conference might meet the
same insignificant fate as the previous. With declining political will and
finances and without any dent in the inequitable global economic and political
architecture, poor people in the world will have to hang on to their dreams of
having a sustainable life. Till the life allows!
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