The Finance Ministers and Central Bank Governors of the G20. Credit: TCMB/cc by 2.0

By Jaya Ramachandran
BERLIN, Sep 9 2015 (IPS)

Finance ministers and central bank governors of the world’s 20 major economies, accounting for 66 percent of world population, have pledged to “promote an enabling global economic environment for developing countries as they pursue their sustainable development agendas”.

In this context, they are looking forward to “a successful outcome” of the U.N. Summit in New York for the adoption of the 2030 Agenda for Sustainable Development. The summit will be held from Sep. 25 to 27 in New York as a high-level plenary meeting of the General Assembly of the world body.

The G20, meeting in Turkey’s capital Ankara on Sep. 4-5, reviewed ongoing economic developments, their respective growth prospects, and recent volatility in financial markets and its underlying economic conditions. They welcomed “the strengthening economic activity in some economies” but said that global growth was falling short of their expectations.

To remedy the situation, they vowed to take decisive action to keep the economic recovery on track and expressed confidence that the global economic recovery would gain speed. With this in view, they would continue to monitor developments, assess spillovers and address emerging risks as needed to foster confidence and financial stability.

The G20 welcomed “the positive outcomes of the Addis Ababa Conference on Financing for Development (FFD)”. In support of these, they aim to scale up their technical assistance efforts to help developing countries build necessary institutional capacity, particularly in the areas specified in the Addis Ababa Action Agenda.

The agreement was reached by the 193 U.N. Member States attending the Conference, following negotiations under the leadership of Ethiopian Foreign Minister Tedros Adhanom Ghebreyesus.

U.N. Secretary-General Ban Ki-moon said: “This agreement is a critical step forward in building a sustainable future for all. It provides a global framework for financing sustainable development.”

He added, “The results here in Addis Ababa give us the foundation of a revitalized global partnership for sustainable development that will leave no one behind.”

The G20 includes 19 individual countries – Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States – along with the European Union (EU). The EU is represented by the European Commission and by the European Central Bank.

The Group was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

It seeks to address issues that go beyond the responsibilities of any one organisation. Collectively, the G20 economies account for around 85 percent of the gross world product (GWP), 80 percent of world trade (or, if excluding EU intra-trade, 75 percent), and two-thirds of the world population. The G20 heads of government or heads of state have periodically conferred at summits since their initial meeting in 2008.

The G20 are responsible for 84 percent fossil fuel emissions worldwide. To support the climate change agenda of 2015, they welcomed the Climate Finance Study Group (CFSG) report, took note of the inventory on climate funds developed by the OECD (Organisation for Economic Cooperation and Development), and the toolkit developed by the OECD and the GEF (Global Environment Facility) to enhance access to adaptation finance by the low income and developing countries, especially those that are particularly vulnerable to the adverse effects of climate change.

While recognising developed countries’ ongoing efforts, they called on them to continue to scale up climate finance in line with their commitments.

“We are working together to reach a positive and balanced outcome at the 21st Conference of Parties of the UNFCCC (COP 21). Based on the outcomes and towards the objectives of the COP21, CFSG will continue its work in 2016 by following the principles, provisions and objectives of the UNFCCC,” they added.

UNFCC is the United Nations Framework Convention on Climate Change that emerged from the Earth Summit in June 1992 in Rio, Brazil, which is currently the only international climate policy treaty with broad legitimacy, due in part to its virtually universal membership.

The CFSG was established by Finance Ministers, in April 2012, and was welcomed by leaders in the Los Cabos Summit, in Jun 2012, with a view “to consider ways to effectively mobilize resources taking into account the objectives, provisions and  principles of the UNFCCC”.

In November 2012, Finance Ministers agreed to “continue working towards building a better understanding of the underlying issues among G20 members taking into account the objectives, provisions and principles of the UNFCCC”, and also recognised that the “UNFCCC is the forum for climate change negotiations and decision making at the international level”.

Following the mandate of the group, and building on the CFSG 2013 Report, the Group identified four areas to be studied in 2014, namely: (a) Financing for adaptation; (b) Alternative sources and approaches to enhance climate finance and its effectiveness; (c) Enabling environments, in developing and developed countries, to facilitate the mobilization and effective deployment of climate finance; (d) Examining the role of relevant financial institutions and MDBs in mobilizing climate finance.

This report aims to present to the G20 Finance Ministers and Leaders a range of non-exhaustive policy options (“toolbox”) for voluntary consideration, related to these four areas, and to suggest further work on other important issues on climate finance.

The G20 said they were “deeply disappointed” with the continued delay in progressing the 2010 International Monetary Fund (IMF) Quota and Governance Reforms. In their view, their earliest implementation is essential for the credibility, legitimacy and effectiveness of the Fund and “remains our highest priority”.

As part of continuing efforts to promote market confidence and business integrity, G20 Finance Ministers also endorsed a new set of G20/OECD corporate governance principles.

The G20/OECD Principles of Corporate Governance provide recommendations for national policymakers on shareholder rights, executive remuneration, financial disclosure, the behaviour of institutional investors and how stock markets should function.

Sound corporate governance is seen as an essential element for promoting capital-market based financing and unlocking investment, which are keys to boosting long-term economic growth.

“In today’s global and highly interconnected world of business and finance, creating trust is something that we need to do together,” OECD Secretary-General Angel Gurría said during a presentation of the new Principles with Turkish Deputy Prime Minister Cevdet Yilmaz,‎ who chaired the G20 finance ministers meeting.

Edited by Kitty Stapp

By Lakshmi Puri
UNITED NATIONS, Aug 17 2015 (IPS)

The efforts of the United Nations and the global women’s movement to promote the women’s rights agenda and make it a top international priority saw its culmination in the creation of U.N. Women, by the General Assembly in 2010.

UN Women is the first – and only – composite entity of the U.N. system, with a universal mandate to promote the rights of women through the trinity of normative support, operational programmes and U.N. system coordination and accountability lead and promotion.This is a pivotal moment for the gender equality project of humankind.

It also supports the building of a strong knowledge hub – with data, evidence and good practices contributing to positive gains but also highlighting challenges and gaps that require urgent redressal.

UN Women has given a strong impetus to ensuring that progressive gender equality and women’s empowerment norms and standards are evolved internationally and that they are clearly mainstreamed and prioritised as key beneficiaries and enablers of the U.N.’s sustainable development, peace and security, human rights, humanitarian action, climate change action and World Summit on the Information Society (WSIS) + 10 agendas.

In fact, since its creation five years ago, there has been an unprecedented focus and prioritisation of gender equality and women’s empowerment in all normative processes and outcomes.

With the substantive and intellectual backstopping, vigorous advocacy, strategic mobilisation and partnerships with member states and civil society, U.N. Women has contributed to the reigniting of political will for the full, effective and accelerated implementation of Beijing Platform commitments as was done in the Political Declaration adopted at 59^th session of the Commission on the Status of Women; a remarkable, transformative and comprehensive integration and prioritisation of gender equality in the Rio + 20 outcome and in the 2030 Agenda for Sustainable Development through a stand-alone Sustainable Development Goal and gender sensitive targets in other key Goals and elements.

Additionally, there was also a commitment to both gender mainstreaming and targeted and transformative actions and investments in the formulation and implementation of financial, economic, social and environmental policies at all levels in the recently-concluded Addis Accord and Action Agenda on  Financing For Development.

Also we secured a commitment to significantly increased investment to close the gender gap and resource gap and a pledge to strengthen support to gender equality mechanisms and institutions at the global, regional and national levels. We now are striving to do the same normative alchemy with the Climate Change Treaty in December 2015.

Equally exhilarating and impactful has been the advocacy journey of U.N. Women. It  supports and advocates for gender equality, women’s empowerment and the rights of women globally, in all regions and countries, with governments, with civil society and the private sector, with the media and with citizens – women and girls, men and boys everywhere including through its highly successful and innovative Campaigns such as UNiTE to End Violence against Women / orange your neighbourhood, Planet 50/50 by 2030: Step it up for Gender Equality and the HeforShe campaign which have reached out to over a billion people worldwide .

UN Women also works with countries to help translate international norms and standards into concrete actions and impact at national level and to achieve real change in the lives of women and girls in over 90 countries. It is in the process of developing Key Flagship Programs to scale up and drive impact on the ground in priority areas of economic empowerment, participation and leadership in decision making and governance, and ending violence against women.

Ending the chronic underinvestment in women and girls empowerment programs and projects and mobilising transformative financing of gender equality commitments made is also a big and urgent priority.

We have and will continue to support women and girls in the context of humanitarian crisis like the Ebola crisis in West Africa and the earthquake relief and response in Nepal and worked in over 22 conflict and post conflict countries to advance women’s security, voice, participation and leadership in the continuum from peace-making, peace building to development.

UN Women’s role in getting each and every part of the U.N. system including the MFIs and the WTO to deliver bigger, better and in transformative ways for gender equality through our coordination role has been commended by all. Already 62 U.N. entities, specialised agencies and departments have reported for the third year on their UN-SWAP progress and the next frontier is to SWAP the field.

Much has been achieved globally on women’s right from education, to employment and leadership, including at the U.N. Secretary-General Ban Ki-Moon has appointed more senior women than all the other Secretary-Generals combined.

Yet, despite the great deal of progress that has been made in the past 70 years in promoting the rights of women –persistent challenges remain and new ones have come up and to date no country in the world has achieved gender equality.

The majority of the world’s poor are women and they remain disempowered and marginalised. Violence against women and girls is a global pandemic. Women and girls are denied their basic right to make decisions on their sexuality and reproductive life and at the current rate of progress, it would take nearly another 80 years to achieve gender equality and women’s empowerment everywhere, and for women and girls to have equal access to opportunities and resources everywhere.

The world cannot wait another century. Women and girls have already waited two millennia. The 2030 Agenda for Sustainable Development and all other normative commitments in the United Nations will remain ‘ink on paper’ without transformative financing in scale and scope, without the data, monitoring and follow up and review and without effective accountability mechanisms in this area.

As we move forward, the United Nations must continue to work with all partners to hold Member States accountable for their international commitments to advance and achieve gender equality and women’s empowerment in all sectors and in every respect.

UN Women is readying itself to be Fit For Purpose but must also be Financed For Purpose in order to contribute and support the achievement of the Goals and targets for women and girls across the new Development Agenda.

This is a pivotal moment for the gender equality project of humankind. In order to achieve irreversible and sustained progress in gender equality and women’s empowerment for all women and girls – no matter where and in what circumstances they live and what age they are, we must all step up our actions and investment to realise the promise of “Transforming our World ” for them latest by 2030. It is a matter of justice, of recognising their equal humanity and of enabling the realisation of their fundamental freedoms and rights.

As the U.N. turns 70 and the entire international development  and  security community faces many policy priorities – from poverty eradication, conflict resolution, to addressing climate change and increasing inequalities within and between countries – it is heartening that all constituents of the U.N. – member states, the Secretariat and the civil society – recognise that no progress can be made in any of them without addressing women’s needs and interests and without women and girls as participants and leaders of change.

By prioritising gender equality in everything they pledge to not only as an article of faith but an operational necessity, they signal that upholding women’s rights will not only make the economy, polity and society work for women but create a prosperous economy, a just and peaceful society and a more sustainable planet.

Part One can be read here.

Edited by Kitty Stapp

Excerpt:

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Aug 5 2015 (IPS)

The Addis Ababa Action Agenda is widely seen as a major disappointment for developing countries as well as others hoping for adequate means of implementation to realise national development ambitions and the Sustainable Development Goals (SDGs).

It has become clear that the South, including the least developed countries, should not expect any serious progress to the almost half century old commitment to transfer 0.7 percent of developed countries’ economic output to developing countries. But to add insult to injury, developing countries cannot expect to participate meaningfully in inter-governmental discussions to enhance overall as well as national tax capacities.In the vast majority of countries in sub-Saharan Africa and Latin America, the tax to GDP ratio has actually stagnated or declined as tariffs and export duties, which accounted for the largest share of tax revenue, declined with trade liberalisation.

While OECD countries agree that taxation is the only viable strategy for developing countries to exit foreign aid dependency in the long run, they have refused to accede to the latter’s desire for a full-fledged inter-governmental body for international tax cooperation under United Nations auspices.

The ability to pursue development policies depends crucially on available fiscal space, which relies mostly on domestic revenues, especially taxes. However, tax revenues in most low- and lower middle-income developing countries are low.

The average tax-GDP ratios in low-income and lower-middle income countries are around 15 and 19 per cent respectively, compared to over 30 percent in high income countries.

Low- and lower-middle-income countries should take steps to increase their revenues; but the main approach in recent decades has been to increase tax rates only if unavoidable. It was presumed that lower rates would ensure better compliance with tax laws, and thus raise revenue.

The prevailing tax wisdom also favoured broadening the tax base, even when taxation capacities are modest. Thus, indirect taxation has tended to increase while direct taxation of corporations and individuals has tended to decline. The latter was supposed to be good for investment and growth although the empirical support for this presumption is dubious.

In the vast majority of countries in sub-Saharan Africa and Latin America, the tax to GDP ratio has actually stagnated or declined as tariffs and export duties, which accounted for the largest share of tax revenue, declined with trade liberalization. Unfortunately, other taxes have not grown to compensate for the lower trade taxes.

There is an urgent need to reverse this trend, with greater commitment to revenue generation in order to improve social protection, create employment and otherwise contribute to sustained economic recovery.

With their different economic circumstances, it does not make sense for developing countries to simply try to emulate developed economies in trying to generate revenue. Even among developing countries, no one size fits all.

And certainly not for all time, as tax systems must evolve with changing economic circumstances. A key question is: which taxes are most likely to meet the requirements of implementability, buoyancy and stability?

Domestic Taxes: Direct or Indirect?

The revenue to GDP ratio can rise in the following ways: the domestic tax base is widened; tax avoidance and evasion are reduced; and new sources of international taxation are found.

There is no reason to be overly pessimistic about direct taxation as tax reform has significantly improved the contribution of direct taxes to overall revenue in many countries. It is certainly possible to enhance tax revenues by increasing the share of direct taxation of the wealthy through more progressive income taxes in developing countries.

However, there should also be a greater effort to ensure better compliance with, and higher collection of existing taxes.

Limiting the discretionary authority of tax officials could also help improve compliance and reduce evasion. Computerisation of tax administration can help limit corruption, as it makes it harder to tamper with records. But government computerisation alone cannot ensure effective introduction of the much-touted value-added tax (VAT), an indirect tax largely responsible for facilitating the shift from direct to indirect taxation.

Improved tax administration can increase the share of personal income taxes in total tax revenue. Expansion of the scope for tax deduction at source has been very effective in taxing those otherwise hard to reach.

Every individual who is a house owner, vehicle owner, club member, credit card holder, passport, driving licence or identity card holder and telephone subscriber can be required to file a tax return.

Excise taxes are another important source of revenue in developing countries as they have a buoyant base and can be administered at low cost. They are typically levied on products such as alcohol, tobacco, petroleum, vehicles and spare parts.

From a revenue perspective, they are convenient, involving few producers, large sales volumes, relatively inelastic demand and easy observability.

Excises may be levied on quantities leaving the factory or arriving at ports, thus simplifying measurement and collection, ensuring coverage, limiting evasion and improving monitoring. Excise taxes currently amount to less than 2 per cent of GDP in low-income countries, compared to about 3 per cent in high-income countries.

Globalisation and Tax Evasion

Revenue losses due to globalisation need to be addressed. There are three main reasons for revenue losses: first, capital movements increase opportunities for tax evasion because of the limited capacity that any tax authority has to check the overseas incomes of its residents; evasion is easier as some governments and financial institutions systematically conceal relevant information.

Where dividends, interest, royalties, and management fees are not taxed in the country in which they are paid, they more easily escape notice in the countries where the beneficiaries live. There have been large non-resident aliens’ bank deposits in some countries like the U.S. that imposes no taxes on interest from such deposits.

Second, avoidance (not evasion) may increase, given international differences in tax rules and rates, because of the choice of tax regime that international-tax-treatment of enterprise income commonly offers. This is more likely for taxation of profits from corporations’ international operations.

Transfer pricing for goods, services and resources – moving among branches or subsidiaries of a company – provides opportunities for shifting income to minimise tax liability.

Third, international competition for inward foreign direct investment has lead governments to reduce tax rates and increase concessions to foreign investors. The tax rates that governments can impose are thus constrained by international competition.

Hence, they are reluctant to raise rates or to tax dividend and interest income for fear of capital flight although it is well known that direct tax concessions have little effect in diverting international investment, let alone in attracting such flows. Hence, such tax concessions constitute an unnecessary loss of revenue.

Not surprisingly, income tax rates, both on corporations and on individuals, have fallen sharply since the 1980s. Beggar-thy-neighbour policies have led to losses of revenue for many developing countries in a larger race-to-the-bottom also involving labour and environmental standards and conditions, which also undermines the possibility of balanced, inclusive and sustainable development.

Finance ministries and tax authorities in developing countries need to cooperate among themselves and with their counterparts in the OECD economies to learn from one another and to close existing loopholes in their mutual interest. With the huge and growing size of public debts as well as the real and imagined fiscal constraints to sustained global economic recovery, such cooperation is more urgent than ever.

Edited by Kitty Stapp

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