Upwards of $100trn of global spending on the green transition is typically estimated as being required by 2050. Credit: Thaiview/Shutterstock.
The Climate Damages Tax proposes a fee per tonne of CO2 embedded within the domestic extraction of coal, oil and gas.
A new report has claimed that a tax on the extraction of fossil fuels could raise $720bn by the end of the decade for to support the green transition in the world’s poorest countries.
Led by Stamp Out Poverty and backed by the likes of Greenpeace, Climate Action Network and Christian Aid, the Climate Damages Tax report, published earlier this week, examines the proposal that OECD countries, in particular members of the G7, should “lead in introducing a fee per tonne of CO2 embedded (CO2e) within the domestic extraction of coal, oil and gas.”
The report outlines that, if introduced in OECD countries in 2024 at a low initial rate of $5 per tonne of CO2e increasing by $5 per tonne each year, the tax would raise a total of $900bn by 2030. This, it says could be split so that 80% ($720bn) went to the newly established Loss and Damage Fund for helping developing countries with in responses to climate losses and damages and 20% ($180bn) was retained by countries for use domestically.
Certainly, ways to ensure money finds its way to transition efforts are necessary, with upwards of $100trn of global spending typically estimated as being required by 2050 – and some estimates being closer to $300trn.
David Hillman, director of Stamp Out Poverty and co-author of the Climate Damages Tax report said of the proposed tax: “This is surely the fairest way to boost revenues for the Loss and Damage Fund to ensure that it is sufficiently financed as to be fit for purpose.”
Grangemouth oil refinery in Scotland. The report authors say the proposed levy could be easily administered within existing tax systems. Photograph: Murdo Macleod/The Guardian
A new tax on fossil fuel companies based in the world’s richest countries could raise hundreds of billions of dollars to help the most vulnerable nations cope with the escalating climate crisis, according to a report.
The Climate Damages Tax report, published on Monday, calculates that an additional tax on fossil fuel majors based in the wealthiest Organisation for Economic Co-operation and Development (OECD) countries could raise $720bn (£580bn) by the end of the decade.
The authors say a new extraction levy could boost the loss and damage fund to help vulnerable countries cope with the worst effects of climate breakdown that was agreed at the Cop28 summit in Dubai – a hard-won victory by developing countries that they hope will signal a commitment by developed, polluting nations to provide financial support for some of the destruction already under way.
David Hillman, the director of the Stamp Out Poverty campaign and co-author of the report, said it “demonstrates that the richest, most economically powerful countries, with the greatest historical responsibility for climate change, need look no further than their fossil fuel industries to collect tens of billions a year in extra income by taxing them far more rigorously. This is surely the fairest way to boost revenues for the loss and damage fund to ensure that it is sufficiently financed as to be fit for purpose.”
A study from the World Bank showed that the pandemic had halted poverty reduction schemes. Photograph: Friedrich Stark/Alamy
The world’s 3,000 billionaires should pay a minimum 2% tax on their fast-growing wealth to raise £250bn a year for the global fight against poverty, inequality and global heating, ministers from four leading economies have suggested.
In a sign of growing international support for a levy on the super-rich, Brazil, Germany, South Africa and Spain say a 2% tax would reduce inequality and raise much-needed public funds after the economic shocks of the pandemic, the climate crisis and military conflicts in Europe and the Middle East.
They are calling for more countries to join their campaign, saying the annual sum raised would be enough to cover the estimated cost of damage caused by all of last year’s extreme weather events.
“It is time that the international community gets serious about tackling inequality and financing global public goods,” the ministers say in a Guardian comment piece.
“One of the key instruments that governments have for promoting more equality is tax policy. Not only does it have the potential to increase the fiscal space governments have to invest in social protection, education and climate protection. Designed in a progressive way, it also ensures that everyone in society contributes to the common good in line with their ability to pay. A fair share contribution enhances social welfare.”
Brazil chairs the G20 group of leading developed and developing countries and put a billionaire tax on the agenda at a meeting of finance ministers earlier this year.
The high levels of dissatisfaction with the NHS are a direct result of the Conservatives deliberately running down health services and using this as grounds for privatisation. I hear all the time from people struggling to get an appointment with their GP; unable to see an NHS dentist, while overstretched wards mean people are left in corridors and staff are overwhelmed.
“Yet it is very clear that people overwhelmingly want the NHS to remain free at the point of use and available to all. They don’t share the Conservative or Labour appetite for creeping privatisation.
“The public also unequivocally backs the NHS being funded by tax, with almost half believing taxes should rise so more can be spent on health services.
“The Green Party has never had any truck with the profit motive in health care and believes in a fully publicly funded NHS. We can find the billions the NHS desperately needs to improve its services and to pay health workers properly. A tax on the super-rich billionaires and multi-millionaires can provide the funds needed to fix the NHS and so rekindle our love affair with our most cherished public service.”
Labour is counting on the unpopularity of the Conservative Party to catapult it into power but in the absence of specific policies and failure to improve quality of life, electoral goodwill will quickly evaporate.
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Labour and Conservatives have become slaves to arbitrary fiscal rules even though they have failed to deliver almost every target relating to economic growth, inflation, public debt, investment and more. Labour emphasises that it wants to reduce the government debt to GDP ratio in five years’ time. However, no rationale is presented for such a straitjacket. No assessment is made of the consequences of removing billions of pounds from the economy. No rationale as to why low debt to GDP ratio is an indicator of the prosperity of a nation and why this should take priority over investment or redistribution. Analogies with household budgets or maxed out credit cards are misleading as governments, especially those with global currencies such as the Pound Sterling, can create money to achieve desired social objectives and levy selective taxation to eliminate inflationary effects. But Labour is no student of the modern monetary theory.
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Debt can be used to rebuild the economy even if Labour and Conservatives are hostile to it. The Post-Second World War boom was built upon direct public investment in new industries and social infrastructure. In 1946, public debt stood at over 270% of its GDP. This provided jobs and fuelled demand. It fuelled corporate investment as the state bought goods and services from the private sector. It laid foundations of emerging industries, such as biotechnology, information technology, aerospace and more specially as the private sector showed little appetite for long-term investment and risks. Within a generation, the public debt came down to 49% of GDP and I can’t recall our parents and grandparents fretting about the public debt.
Instead of a dynamic state, both Labour and Conservatives support further cuts in public spending even though that will reduce investment, slow economic growth, and inflict long-term damage. Too many public buildings and schools are crumbling away. The government response is that college spending per student aged 16–18 in 2024 will be 10% below 2010 levels, and about 23% below them for school sixth forms. Since 2010 local council funding has been cut by 23.3% in real terms, leading to degradation of public services and higher council tax on hard-pressed households. Hospitals in England have a waiting list of 7.6m appointments. None of this can be addressed by adherence to arbitrary fiscal rules.
There is a strong case for redistribution of income and wealth, but Hunt and Reeves ignore it even though higher disposable income for the less well-off has a greater multiplier effect. No amount of economic growth can be sustained unless people have good purchasing power to buy goods and services. Both parties reaffirm their faith in trickle-down economics which has seen wealth sucked upwards and prevent economic recovery. The UK has 171 billionaires with combined wealth of £684bn. The richest 1% of the population has more wealth than 70% of the population combined. The richest 10% of households hold 43% of all wealth, and the poorest 50% own just 9%.
