By Mike Phipps
The Transnational Institute has published a new report with ten proposals to raise the funds necessary to meet the cost of the global COVID-19 pandemic and to pay for the transition away from a fossil fuel economy.
Given that these costs are colossal, some bold thinking is needed. Fortunately, the gravity of the twin crisis of pandemic and climate emergency have made many people aware just how radical the solutions need to be if are to meet the challenges.
The report, Paying for the Pandemic and a Just transition, estimates $9.410 trillion will need to be raised every year for the next ten years to tackle the crises. The spending includes paying $1.2 trillion for the fiscal measures that have been announced to combat the pandemic, $3 trillion a year to decarbonise the global economy and another $3 trillion to achieve the UN Development Goals.
Much more interesting are the ideas on how to raise the money to cover this.
1. A global wealth tax could raise $4.417 trillion a year.
Wealth is massively under-taxed and wealth concentration is worsening. A billionaire wealth tax alone could raise up to $100 billion a year, while a millionaire wealth tax could raise $1.159 trillion. A tax on the wealthiest 1% in each country could raise $418 billion a year. There are many options – but governing elites sadly lack the will to pursue this, despite a strong moral case.
2. Taxing the capital income from offshore private wealth could raise $125 billion a year.
This would not even require a new tax, but just the closing of loopholes that allows the rich to hide their wealth offshore.
3. An excess profits tax on the 32 most profitable global companies could raise $104 billion a year.
This would target companies that made extra profits as a result of COVID-19, such as Microsoft, Apple, Google, Nestle and Amazon. Oxfam put forward this proposal, based on the experience of excess profits taxes that the US and Britain imposed on excess corporate profits after the First and Second World Wars.
4. Taxing offshore corporate profits could raise $200–$600 billion a year.
Profit shifting, especially out of the Global South into the Global North, is now huge and even the OECD is proposing a minimum, although very low, rate of corporate tax across all countries.
5. A financial transaction tax could raise between $237.9 and $418.8 billion annually.
Just 0.1% on the trading of stocks and bonds instruments and 0.01% on transactions of derivatives could raise immense sums, but heavy lobbying by the financial sector has prevented such a measure being implemented.
6. Eliminating public subsidies to the fossil fuel industry and implementing a tax on the cost of pollution could raise an extra $3.2 trillion a year.
More than half of global industrial greenhouse gases are produced by just 25 profitable corporate and state producers, and on the consumption side, half of these emissions came from the world’s richest 10% of people. Yet it’s the Global South which suffers more than 90% of the costs, and 98% of the deaths associated with climate breakdown. Getting rid of state subsidies for fossil fuels and implementing a carbon tax would raise a very substantial sum.
7. Redirecting 10% of global military spending towards fighting the real security crises could raise $143.7–$191.7 billion a year globally.
Global military spending in 2019 was $1,917 billion. A 10% reallocation of military spending is supported by The Global Campaign on Military Spending, US Senator Bernie Sanders and Code Pink. The principle of humanitarian disarmament during the pandemic has gathered increasing support.
8. A debt jubilee, of the size called for by UNCTAD, could free up the equivalent of $100 billion a year for the Global South over the next ten years.
The United Nations Conference on Trade and Development made this proposal at the start of the pandemic, based on the growing proportion of external debt repayment that was eating into poorer countries’ revenues and the serious prospect of several debt defaults.
9. A new issuance of Special Drawing Rights could free up the equivalent of $250 billion a year for the Global South over the next 10 years.
Progressive International has called for a big extension of Special Drawing Rights, which allow states to acquire more money without taking on more debt. UNCTAD support the idea, but the US is currently vetoing it.
10. A new Marshall Plan, of the size called for by UNCTAD, could raise the equivalent of $50 billion a year for the Global South over the next ten years.
Paying for the pandemic and a just transition will require both redistributing resources from the private sector to the public sector and redistributing resources from the Global North to the Global South. This Marshall plan could take the form of grants raised by central and development banks.
Taken together these initiatives would raise $9.457 trillion annually. All the figures are put together from pre-existing policy proposals from international organizations, think tanks, academics and social movements.
Make no mistake: the scale of the crisis has widened the Overton window of what is considered economically feasible. While the fossil fuel industry has used COVID-19 to derail the EU Green Deal and weaken environmental standards, and the IMF is pushing unbearable levels of austerity onto poorer countries, progressives are gaining a new audience for their eminently sensible ideas.
The report makes a fundamental point: “Raising finance is not sufficient to delivering systemic change to our unjust global economy. To ‘build back better’, more than just money will have to be mobilised. This report points throughout to examples of structural change that could start to change the balance of power away from a small financial elite towards a more democratically-controlled economy.”
Ben Tippet, who wrote the report, should be commended for bringing so many ideas together into a feasible manifesto for change.
Receive regular updates about Labour Hub articles. Scroll down to FOLLOW US!