Phillipa Bonella: Taxation is not a dirty word

As INTERNATIONAL aid agencies such as Scottish Catholic International Aid Fund (SCIAF) know only too well, climate change hits the poorest of the world hardest. Rich countries like ours have a responsibility for creating the problem, but it is the poor countries which are feeling the effects, and governments have recognised that funds are needed to help them tackle the climate challenge.

Last December at the UN's climate change summit in Cancun, wealthy governments agreed to create a green climate fund in the United Nations. This should receive and distribute up to 61.1 billion a year from 2020. The problem is that nobody knows yet where this money is going to come from. At a time of public spending cuts, governments are not stumping up the cash.

A report launched today by an international alliance of Catholic development agencies outlines that if used well, a new financial transaction tax (FTT) on high-end products such as derivatives could be a major step towards filling the funding gap.

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Just part of the estimated 404bn annual revenue from a tax on such transactions, if introduced at an average rate of just 0.05 per cent, could finance the fight against climate change. In fact, the FTT would generate sufficient money to fill the climate fund and finance other global challenges. This would reduce the need for further sacrifices to be made by the taxpayer.

Unfortunately, while it is widely acknowledged that such a tax is feasible, notably in recent studies by the International Monetary Fund and the European Commission, the necessary political will is lacking.

Countries like Germany and France are supportive, but others including the UK, the United States and the Netherlands are unwilling. The naysayers should realise that if the wellbeing of people and the planet are at risk, the financial sector is, too.

The right thing for the UK government and others to do is to put people first, and introduce the financial transaction tax now.

• Philippa Bonella is head of communications and education at Scottish Catholic International Aid Fund

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