UN climate finance group proposes transaction tax
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The UN high-level Advisory Group on Climate Change Financing (AGF) on Friday proposed that world governments apply taxes on specific financial transactions in order to fund commitments made to developing countries in dealing with the effects of climate change.
In its final report to UN Secretary-General Ban Ki-moon, released Friday, the AGF recommended the tax to help fulfill the pledge made at last year's Copenhagen Summit on climate change. However, the group acknowledged that implementing the tax worldwide would be politically unfeasible.
"Up to 10 billion U.S. dollars could be mobilized from other instruments, such as the redeployment of fossil fuel subsidies in developed countries or some form of financial transaction tax, though diverging views will make it difficult to implement this universally," stated the report.
Launched by the secretary-general in February 2010, the advisory group will seek to identify long-term financial resources for climate change. It comprises 21 principle members including heads of state, ministers, private sector officials, along with experts on public finance and development.
The AGF is tasked with mobilizing delivery of the funds that were pledged at the 2009 Copenhagen conference, in which world leaders agreed to scale up support to reach 100 billion U.S. dollars by 2020 -- in addition to 30 billion U.S. dollars by 2012.
The report estimates that by 2020 between two billion U.S. dollars and 27 billion U.S. dollars could be raised as revenue from financial transaction taxes on foreign exchanges.
However, the AGF notes that "the lack of political acceptability (for a financial transaction tax) and unresolved issues of incidence on developing countries make it difficult to implement universally."
Instead, one perspective from the group noted that "a financial transaction tax was feasible only among interested countries at the national or regional level."
The report concluded that "t is challenging but possible to meet the 100-billion-dollar goal by 2020. "Funding will need to come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance, the scaling up of existing sources and increased private flows."
Indicating that key elements of financial flows would be mutually reinforcing, the group stated that "careful and wise use of public funds in combination with private funds can generate truly transformational investments."
The group's final report will feed into the UN Framework Convention on Climate Change, in time for the Conference of the Parties that is set to take place in Cancun, Mexico in December.
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