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Opinion: Strengthen Tax Cooperation to End Hunger and Poverty Quickly

Jomo Kwame Sundaram is the Coordinator for Economic and Social Development at the Food and Agriculture Organization and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

ROME, Jul 20 2015 (IPS) - By the end of this year, the 15-year time frame for the Millennium Development Goals will end, with good progress on several indicators, but limited achievements on others.

But public interest has already moved on to the post-2015 Sustainable Development Goals.

Recent experience has amply demonstrated that investment and growth alone cannot eliminate hunger and poverty by 2030.

Despite uneven success with the MDGs, the level of ambition has risen, with SDG1 seeking to eradicate poverty and SDG2 to eliminate hunger and malnutrition, all by 2030. Last week, the Addis Ababa Action Accord began with: “Our goal is to end poverty and hunger.”

Almost four-fifths of the world’s poor live in rural areas, which have less than half the world’s population. Hence, raising rural incomes sustainably is necessary to achieve the first two SDGs.

Ending poverty and hunger sustainably will need a combination of social protection and ‘pro-poor’ investments.

As food costs 50 to 70 percent of the World Bank’s poverty line income, poverty and hunger are intimately inter-related, although poverty and hunger measurement generates different numbers.

Agricultural investments generally have the biggest impact on reducing poverty, all the more so, if pro-poor, as well as designed and implemented well. Yet, while farmers themselves are the major source of agricultural investments, most formal financial institutions discriminate against them, especially smallholder family farmers, landless tenants and labourers, with little bankable collateral to offer.

Recent experience has amply demonstrated that investment and growth alone cannot eliminate hunger and poverty by 2030. Most developing countries have long suffered high unemployment and underemployment, with youth unemployment growing rapidly. With current economic prospects uncertain, especially after the recent slowing of the world economy, and widespread insistence on fiscal austerity and economic liberalisation, things are likely to get worse.

With sufficient political will and fiscal resources, poverty and hunger can be ended very quickly with adequate, well-designed and sufficient social protection, in fact, well before 2030. (This is why the G77 group of developing countries insisted last week on strengthening the U.N. committee on international tax cooperation — surely of interest to most developed countries as well.)

The world can currently produce enough food to feed everyone, but most of the hungry simply do not have the means to access enough food.

Social protection can not only ensure adequate food consumption, but also enable investments by those assisted to enhance their nutrition, health and other productive capacities, thus raising their incomes and, in turn, further increasing investments to expedite the transition from the vicious cycle of poverty and hunger, in which they have been trapped, to a more virtuous cycle free of want.

According to a recent World Bank report, a billion people in 146 low (LICs) and middle income countries (MICs) currently get some form of social protection. Yet, 870 million of the world’s extreme poor – most recently estimated at 836 million for 2015 – remained uncovered, mainly in the countryside. Not surprisingly, the greatest shortfalls are in the LICs.

In the LICs, 47 percent of the population are the extreme poor, with social protection covering less than a tenth of the population. In the lower MICs, social protection reaches about a quarter of the extreme poor, but half a billion remain uncovered. In the upper MICs, about 45 percent of the extreme poor is covered by social protection.

Last week, the Director-General of the Food and Agricultural Organization (FAO), and his counterparts from the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP), presented their new estimates on investments for sustainable hunger and poverty eradication by 2030.

While some may quibble over details, they made the compelling case that ending hunger and poverty in a sustainable way is eminently viable, feasible and affordable, costing about 0.3 per cent of world economic output in 2014. Most MICs can afford the needed financing, but most LICs face serious fiscal constraints and will need budgetary support and technical assistance.

Enough social protection could end hunger and poverty very quickly, but it is not sustainable without higher earned incomes for those of the extreme poor able to work. An early big investment push will reduce longer term financing costs besides providing a much needed boost to aggregate demand in the face of the world economy’s ongoing economic doldrums.

The joint proposal by the Rome-based U.N. agencies not only shows that with the requisite political commitment, we can end hunger and poverty very quickly while creating the conditions for keeping both permanently in the catacombs of history.

Despite the poor compromise in Addis Ababa, quick real progress to enhance countries’ fiscal capacities through more effective international tax cooperation under U.N. auspices can be the third Financing for Development conference’s biggest contribution to this effort.

Edited by Kitty Stapp

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