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Why New International Taxes for Development Are InefficientChart 1Revenues from the Tax on Airline Tickets in France (Millions of Euros)Year 2006 2007 2008 2009 2010 2011 201245 164 173 162 163 175 185Source: République Française (2013).and US$10 billion per year if it were to be extendedto other countries. 26The German government devotes about 10% ofits revenues from the sale of EU allowances (permitsto issue carbon dioxide) to climate protection in developingcountries. This is the other current IFD tax(excluding future taxes that will be necessary to repayIFD bonds).Chart 2 shows how taxes constitute (currentlyand in the future) the largest part of IFD revenues.Bond financing has reached US$2.4 billion,the ultimate goal being US$4 billion. Donorgovernments and the Gates Foundation havealso pledged US$1.5 billion for subsidizing andpurchasing vaccines. But these are stocks, asopposed to annual flows of financing. Moreover,public bonds and other government commitments(as opposed to private donations) have to befinanced by future taxes. Looking at current taxesas annual flows, we see more clearly how IFD isdominated by taxes. IFD tax revenues from the saleof German pollution allowances totaled 120 millioneuros in 2008 and 230 million euros in both 2009and 2010. 27 (Note that selling pollution permits isequivalent to a tax.) The air ticket levy now raisesabout US$250 million a year.Moreover, proposals for extending current IFDtaxes and creating new ones would greatly increasetheir potential, as shown on Chart 3 (borrowedfrom the UN). The UNDP declares that “thescope for more innovations in the future is both26. UN (2012), p. 4.27. See this webpage from the German Ministry for EconomicCooperation and Development: http://www.bmz.de/en/what_we_do/issues/development-financing/innovative-development-financinginstruments/Auctioning-emission-certificates/index.html.IFD taxrevenues are likely to have gone done since because of the decrease inthe price of carbon allowances.10enormous and probably inevitable.” 28 The currenttaxes—the air ticket tax and pollution allowancesearmarked for developing countries—could beextended to other countries. The chart also showsthe potential of the new taxes currently proposed:Special Drawing Rights (SDRs) for thegovernments of developing countries (We willsee later in this chapter how this would amountto an inflation tax.) part of the trading schemes proposed by theKyoto agreement, and we will include it in thecategory of carbon taxes.),,This Research Paper will focus onthe most important of the IFD taxesnow proposed: FTTs, carbon taxes,tobacco taxes, and SDR allocations. ,,This Research Paper will focus on the mostimportant of the IFD taxes now proposed: FTTs,carbon taxes, tobacco taxes, and SDR allocations.Financial transaction taxes are one sort ofproposed IFD taxes. Taxes on different financial28. UNDP (2012), p. 17.Montreal Economic Institute