Bill Gates will tell the G20 group of developed and developing countries on Thursday that they could raise an extra $48bn (£30bn) a year to fight global poverty by levying a small tax on share and bond trading.
Despite hostility from Britain and the US, the Microsoft founder will add weight to the growing campaign for a so-called Robin Hood tax when he tells the two-day summit in Cannes that a levy on finance would help hard-pressed rich nations to meet their aid pledges to the poor.
Gates will acknowledge the lack of G20 unanimity for a financial transaction tax when he presents a report – Innovation with Impact – commissioned by Nicolas Sarkozy in a 75-minute session on development on Thursday afternoon.But the study concludes that aid budgets would be boosted by $9bn even were the FTT limited to the larger European economies, such as Germany and France, which back the idea.
Speaking to the Guardian on the eve of the summit, Gates said: “It is very plausible that certain kinds of FTTs could work. I am lending some credibility to that. This money could be well spent and make a difference. An FTT is more possible now than it was a year ago, but it won’t be at rates that magically raise gigantic sums of money.”
The publication of the Gates report comes at a time when the issue of a financial transaction tax has been moving up the political agenda in the UK. The archbishop of Canterbury, Rowan Williams, supported the idea earlier this week but David Cameron told MPs on Wednesday that Britain would only back an FTT if it was introduced globally. Andrew Tyrie, the chairman of the Treasury select committee, wrote to the chancellor, George Osborne, asking whether Britain would veto an attempt by the European commission to implement an FTT in Europe.
The City has been lobbying the government hard to resist an FTT but Gates said he hoped the prime minister would allow other members of the G20 to press ahead even if Britain remained opposed. “It doesn’t seem that the UK should have an objection when it has a settlement tax of its own,” Gates said, referring to stamp duty levied on share deals. He added: “Hong Kong and the UK, which are both big financial centres, have settlement taxes. At the same rate levels it could be adopted by more countries and raise a fair amount of revenue.”
The report identifies an FTT as one of three ways of raising money. Gates will tell the G20 that it could garner almost $11bn for health aid projects if all members levied tobacco excise taxes of at least 70% of the pack price and earmarked a slice of the revenue for development. Small taxes on shipping and aviation fuel could raise $37bn and $27bn respectively, the report says.
Gates said that even before the financial crisis, some countries – including Italy – had been backsliding on aid promises, but that the global downturn since 2007 had made things more difficult. “It’s very tough now. Government budgets are being looked at very hard.”
The billionaire philanthropist will urge countries to use a portion of any extra tax revenue to raise their aid spending to 0.7% of national output, the UN target which the UK plans to meet by 2013. “That’s why I am there, to encourage development, particularly in health and agriculture. I am not there as an expert on tax.”
At a time when there have been signs of “aid fatigue” in donor countries, Gates insisted that the financial help provided over the past 10 years had had spectacular results. “Aid does work. Deaths go down when vaccines are properly delivered.”
He added that while some countries – the UK, South Korea and Australia – had stuck to their development pledges, the aid budgets of Germany and France had been flat. “Germany is in the best position to set a good example,” Gates said. “We are very hopeful about that.”
Treasury sources said Britain would hit the 0.7% target without an FTT, adding that the European commission’s plans would see individual countries using the extra revenue for deficit reduction rather than development. They added, however, that the UK would not seek to prevent other countries introducing an FTT if they wanted to do so.
Gates said he thought his report would make a difference to the G20 discussions. “I think it will help keep development on the agenda when there is a temptation to look at short-term issues. It is a valuable process and I think in my 75 minutes I can cheer them up.”
Source: Gurdian UK