Publication (PDF format) - Institut économique de Montréal

More documents

Recommendations

Info

Why New International Taxes for Development Are InefficientChart 7GAVI’s Remuneration Costs and Average Remuneration in Full-Time Equivalent20062007200820092010Regular personnel548590103124Contractuals008.54.50Remuneration (US$ million)7.7213.0918.720.7Average cost per employee ($)Remuneration143,000154,000190,000160,000160,000Training, staffing12,0008,0008,00010,0007,000Travel and representation39,00034,0007,00028,00028,000Total average cost per employee (US$)194,000197,000205,000199,000*ForecastSource: Cour des comptes (2010), p. 73.are more motivated to engage in collective actionthan the victims. This is why farmers, when theyare numerous, as they are in developing countries,are exploited by the small urban establishment,while the small minority of farmers in developedcountries exploits the large majority of taxpayercustomersthrough subsidies and protectionmeasures. 114 Robert Bates, a professor of economicsat Duke University, has argued that the governmentsof developing African countries act as agents forthe concentrated interests of the urban minorityand organized labour, and work against the diffuseinterests of the rural majority. 115Similarly, most IFD taxes (tobacco taxes beingthe main exception) levy (or would levy) a smallamount of money from a large number of peoplewho will, therefore, not be motivated to resist,while the direct recipients are a small numberof bureaucrats in national or internationalbureaucracies. UNITAID describes the air ticketlevy as a “painless addition to the cost of a ticket.” 116Similarly, an FTT or a carbon tax would add littleto the expenses of the ultimate taxpayer, that is, theworker whose salary would be slightly lower or theconsumer who would pay slightly higher prices.A little inflation generated by new SDRs wouldonly take small individual amounts from a vastmultitude.Fifteen years ago, Professor Charles Rowley claimedthat “[a]n estimated $15 billion—more than thetotal annual aid received by African countries—flees Africa each year, wealth that has been illegallyacquired and transferred by African elites, many ofwhom pay lip service to socialism.” 117 Rent-seekingmay not always be so obvious, it may not always beillegal, but it is always a costly problem.,,The typical IFD tax is designedas a way for governments to raisemore money without meetingtaxpayer resistance. ,,Politicians’ incentives are often no better than thoseof bureaucrats. Governments seeking developmentaid form powerful lobbies in internationalorganizations. Donor governments often actout of motives that trump compassion, such asprestige, influence, or strategic power. The Frenchgovernment wants increased visibility in UNITAIDand more influence over IFFIm and GAVI. 118 Andgovernments are forever seeking new ways to raisenew revenues, a push that is exacerbated by thehigh level of public debt around the world.114. Lemieux (2008), pp. 364-366115. Bates (1998), especially pp. 331-358.116. At http://www.unitaid.eu/en/resources-2/events/9-uncategorised?start=75.30117. Rowley (1999), p. 251.118. Assemblée nationale (2011), pp. 21-22; Cour des comptes (2010), p.115 and passim.Montreal Economic Institute
Why New International Taxes for Development Are Inefficient3.3 Hidden and Inefficient Taxes:Transparency AgainWe are now in a position to extend our previousdiscussion of transparency. In Chapter 2, we sawthat IFD taxes (the current ones and most of themajor ones under consideration) were hidden andnon-transparent. The government failures reviewedin the present chapter explain why. The typical IFDtax is designed as a way for governments to raisemore money without meeting taxpayer resistance.This lack of transparency is not a bug, but onceagain, an integral feature of IFD taxes.Consider the general picture. Politicians indonor countries extend their international influence(and thus, often, their influence at home) by givingmoney to other governments and to internationalorganizations. Politicians in recipient countrieshave an interest in supplementing their budgetswith cheap international money. The bureaucratsmanning donor and recipient agencies have thesame interests. All the incentives seem to point inthe same direction. More generally, politicians arealways after more money with which to woo votersor satisfy special interests. The problem is to raisethe money without meeting taxpayer resistance.Hence the tendency to impose taxes that will flyunder the radar.Now consider the advantages of (current andproposed) IFD taxes. Not only are they often easyto hide, but they are generally levied in smallamounts spread over a large number of taxpayers(or ultimate taxpayers). Given the logic of collectiveaction, no individual taxpayer is going to spendmuch time or other resources fighting a tax thatcosts him little; on the other hand, the bureaucratsand foreign governments who benefit will expendmuch effort lobbying for it.At least one IFD tax is even partly hidden fromlegislators. Although the French air ticket tax ispaid into the account of the Agence française dedéveloppement, its proceeds are not accounted foras normal receipts but are hidden in an annex ofthe government’s budget documents. 119 One IFDtax that we have not reviewed may provide an119. Cour des comptes (2010), p. 7.even better example of a well-hidden tax: futuregovernment commitments, and thus future taxes,against which IFFIm issues bonds on capitalmarkets, are specifically designed not to be recordedin national public debt accounts. It was, says theCour des comptes, a “political choice of France andthe other governments that designed or adopted”this method. 120 The French auditor criticized suchcreative accounting.Not only are IFD taxes not transparent, but theinternational development agencies that benefitfrom them are not paragons of transparency either.UNITAID is formally audited by the WHO, ofwhich it is a part; the WHO gives this mandateto India’s Auditor general who, as of mid-2010,still had to carry out a single formal audit. 121 Hefinally did produce audited statements in April2012, but only going back to 2008. 122 Internationalorganizations do not normally open their books toany other than their own auditors, which makesindependent inquiry difficult. Both the WHOand UNICEF, which benefit from a large part ofUNITAID’s money, refused the Cour des comptesaccess to their internal audits. 123 The French auditor,who was thus unable to carry out a full audit, raisedquestions, and made recommendations, about thelack of transparency of international organizationsthat benefit directly or indirectly from the Frenchairline ticket tax. On the audit issue, the Courdes comptes admits that no further bureaucraticlayers should be added to what are already verybureaucratic organizations—which raises otherquestions about these organizations. A subsequentreport by a committee of the French NationalAssembly states that the auditing procedures atUNITAID, IFFIm and GAVI are not satisfactory. 124International agencies are not subject toaccess-to-information laws like those of donorcountries. However, it should be noted that this isdue to international rules accepted by the donorgovernments themselves and transcribed intotheir own national laws. In Canada, for example,120. Ibid., pp. 91-92 and 124.121. Ibid., pp. 26 and 29.122. UNITAID (2012a).123. Cour des comptes (2010), p. 29.124. “Les audits internes et externes des structures Unitaid et du groupeIffim GAVI laissent à désirer.” Assemblée nationale (2011), p. 18.Montreal Economic Institute 31
Page 2 and 3: 910 Peel Street, Suite 600Montreal
Page 5: Table of ContentsEXECUTIVE SUMMARY
Page 8 and 9: Why New International Taxes for Dev
Page 42 and 43: ,,IFD taxes are in many waysthe epi
Page 52: ISBN 978-2-922687-43-9

Publication (PDF format) - Institut économique de Montréal

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?