Financing development?

Wednesday, April 25, 2018 - 09:27

The Financing for Development Forum, a 4-day UN meeting where participants from around the world will discuss how we, as a global community, should, can, will finance development, is in full swing.

There is much at stake. On the one hand, there are the Sustainable Development Goals, where we - for the vast majority of the goals - are not where we should be. And on the other hand, major debt issues are lurking round the corner. Many developing countries are highly indebted and are struggling to find a way out – and simultaneously they do not have resources to ensure the human rights of their people - rights such as education and health.

Two key issues in the discussions are:

  • how can and should a country secure financial resources to fund this? And
  • how do we as a global community ensure that the funds go to what a country’s citizens need and demand?

The key to financing development is widely agreed is domestic revenues, and in terms of redistribution; the key is political participation and political will, to meet the needs of in particular the poorest part of the population.

There are many challenges with regards to financing development – globally there are major challenges with financial resources that do not end up with the Treasury, due to illegal financial flows (IFF - which will also be a major issue for the remainder of this week). IFFs are illicit cash flows, including money from corruption, money laundering, drug trafficking but also tax dodging.

The Panama Papers and the Paradise Papers, along with other leaks, have recently revealed how many wealthy individuals and multinational companies are involved in IFFs, and how a number of countries, including some major economies are systematically providing institutionalised facilitation of IFF. The leaks also show how this leads to billions and billions end up in tax havens. Consequently, the tax burden ends up with ordinary citizens as well as the poorest part of the population. This leads to increased inequality, which does not make the world a better place.

No country, rich or poor can tackle tax dodging, illegal cash flows and tax havens on its own. Therefore we, as a global community, must come together. IFF and tax dodging are global challenges that require global action.

Therefore, we encourage all countries to support the establishment of a strong intergovernmental tax commission under the auspices of the UN, in order to achieve better coordination and cooperation on international tax matters and to tackle the problem of tax evasion, illegal financial flows, tax competition and tax havens.

This, among other things, is what we as ActionAid are in New York to fight for.