Micro levies for global public goods

Question

What experience is there of using micro levies to mobilise finance for global public goods? What scale of funding have these realised? What are the criteria that have shaped success/failure? What opportunities have been identified for micro levies to contribute to global public goods?

Summary

One type of innovative development finance is the micro levy, also referred to in donor literature as taxes, dues and solidarity levies for development. Donor proponents of this type of innovative finance for development make the case for linking new taxes on globalised activities (finance, travel etc) or global public bads (carbon emissions) to financing global public goods. Current examples include:

  • Solidarity levy on airline tickets – channelled to UNITAID to support the treatment and care for those affected by HIV/AIDS, tuberculosis and malaria, focusing on low income countries.
  • Micro levies on oil, gas, gold and other mining activities – channelled to UNITLIFE to fight chronic malnutrition in sub-Saharan Africa.
  • French financial transactions tax – earmarked to French global climate and health activities.
  • Norwegian carbon tax – channelled to UNITAID.
  • Tax on Certified Emissions Reduction – channelled to the Adaptation Fund to finance climate change adaptation.

Key findings of the report include:

  • Assessments of micro levies find that they have added to public funds for development; however, these are not major fundraisers.
  • On the whole mechanisms such as the airline ticket solidarity levy are considered to have provided more stable and predictable revenue streams for international development than traditional donor budget outlays; but remain vulnerable to fluctuations in global economic or other conditions, and domestic political will.
  • There are well-publicised claims for the reach and development impact of initiatives such as the airline ticket tax, and in particular for the results of UNITAID.

The airline solidarity levy is often lauded as a significant pioneering example. Advocates urge the development of other micro levy proposals to finance other global public goods. Proposals include: aviation taxes; financial transaction taxes; a global currency transaction tax; a global carbon tax; and solidarity tobacco contributions. There has been slow progress on developing these further.

 

Enquirer:

Suggested citation

Carter, B. (2015). Micro levies for public global goods (GSDRC Helpdesk Research Report 1318). Birmingham, UK: GSDRC, University of Birmingham.