Japan's foreign minister champions international tax system

Posted by On 2:25 AM

Japan's foreign minister champions international tax system

Japanese Foreign Minister Taro Kono is talking up a global tax system, the revenue from which would replace rich countries' aid to developing countries. © Reuters

TOKYO -- Japan's foreign minister wants developed countries to come together to impose international taxes, the revenue from which would be used to fight HIV/AIDS, malaria and other infectious diseases in developing nations.

Taro Kono envisions what he calls an "international solidarity tax" replaci ng official development assistance, a form of aid he says has "worn out" advanced countries.

With ODA programs on a general decline, one of Kono's proposals, a tax on foreign exchange transactions, would bring in hundreds of millions of dollars a day.

The Japanese government has discussed the idea, but the corporate sector is pushing back hard.

Nevertheless, the Foreign Ministry plans to officially propose the scheme in its request for fiscal 2019 tax reforms, to be compiled this month. It has called for studying the scheme in its annual requests for nine years in a row.

During a Tokyo symposium on international solidarity, Kono in July said the tax is "one of the promising alternatives to fill gaps in required funding without relying on national budgets."

An international solidarity tax would tap cross-border transactions; proceeds would be used to combat poverty and infectious diseases in developing countries.

The idea w as prompted by the millennium development goals that the United Nations adopted in 2000. There have been proposals to tax airfare for international flights, financial asset transactions, other types of commerce that cross borders and carbon dioxide emissions.

The revenue from such taxes would be more stable than the budgets governments have to reach into to fund ODA programs.

Kono in May tried to spark a debate on the issue among foreign ministers of the leading rich and developing nations who had gathered for a G-20 meeting. He asked them to consider introducing an international solidarity tax. He also plans to put the tax on the agenda for a G-20 meeting Japan is to host next year.

Some countries have already introduced such a tax. Fourteen countries, including France and South Korea, impose airfare solidarity taxes. For international flights, France collects 40 euros ($46) on first and business class tickets and 4 euros on economy class tickets. The revenue is u sed to treat HIV/AIDS and malaria in developing countries, among other things.

There is no official definition for international solidarity tax, and no international treaties have incorporated it. As such, countries are setting tax rates as they see fit and deciding how to spend the revenue.

One of Kono's proposals is to tax foreign exchange transactions and have an international organization manage the revenue.

If a 0.01% tax had been applied to foreign exchange transactions in 2016, when the global daily volume was about $6.5 trillion, $650 million worth of revenue would have streamed in every day, according to Kono.

Debate on introducing an international solidarity tax began about a decade ago in Japan. A supra partisan group of lawmakers formed to promote the tax, and a committee was set up under the government's Tax Commission that had begun fleshing out a specific scheme.

But the efforts came to a halt once corporate Japan rose up in opp osition. Japan's airlines said a new tax would reduce passenger numbers and sap their international competitiveness.

There was also concern that a proposed tax on stock and bond transactions would distort the market and slow the economy.

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Source: Google News Japan | Netizen 24 Japan

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