Implementing fair taxes could help the world raise more than US$2 trillion yearly to help frontline communities cope with climate chaos and transition to greener pathways, shows a new ActionAid report.
The report comes as climate negotiators meet in Bonn to get the ball rolling on plans to set a new climate finance goal to be agreed at COP29.
As communities grapple with heatwaves and repeated floods, ActionAid’s report, titled Finding the Finance: Tax Justice and the Climate Crisis, reveals that tax justice will be central to finding the funds urgently needed for climate action.
ActionAid’s data finds a range of tax mechanisms are available to wealthy countries like Australia – which, if implemented, could raise over US$2 trillion globally per year towards the international climate finance goal.
ActionAid says that the groundbreaking UN General Assembly decision last year to set up a new UN Framework Convention on Tax could be transformative in fixing unfair global tax rules and enabling low income countries to raise funds. By implementing tax systems that target the wealthiest individuals and companies, these countries could raise over US$ 300 billion per year for domestic priorities, including climate action.
Michelle Higelin, Executive Director at ActionAid Australia, says:
“Women in low-income countries desperately need increased access to resources to respond to the growing impacts of the climate crisis, which is having a devastating impact on communities and eroding hard won gains in gender equality. They are calling on rich countries, like Australia, that have caused the problem to step up and pay our fair share of global climate finance. Tax justice will be central to raising the trillions of dollars needed every year in climate finance. We need progressive, gender-responsive and climate sensitive action on tax in rich, high-polluting countries like our own.
“This new report shows that there are a range of tools at our disposal to mobilise climate finance at the scale that’s needed – what we need is the political will to implement them. Australian fossil fuel companies have played a harmful role in contributing to the climate crisis and have also profited significantly and benefited from a favourable tax environment. It’s time for polluters to pay up and contribute their fair share through a more just tax system.
“We also need to see changes in how global tax rules are set and enforced, so low-income countries can increase their own domestic tax revenues rather than rely on foreign aid. There are huge opportunities for greater global coordination on tax which can be accelerated through urgent work on developing the UN Framework Convention on Tax – and Australia must actively engage in and support these discussions.”
ActionAid International’s Global Lead on Climate Justice, Teresa Anderson, says:
“There’s no way around the fact that if we want enough climate action to ensure a safe future, we’re going to have to find a way of covering the costs. But UN climate talks are being poisoned by the false narrative that there’s not enough money, and that developing countries should accept a weak climate finance goal based on loans that will push them deeper into debt.
“The good news is that with fair and ambitious taxes that target the biggest polluters, it’s entirely possible for wealthy countries to raise the trillions that can give our planet and its people a fighting chance to address the climate crisis. When it comes to climate action, tax justice can be a game changer.”
Chikumbutso Ngosi, ActionAid’s International Project Manager for Young Urban Women project based in Malawi, says:
“Countries like Malawi face a double tragedy – debt distress and heightened vulnerability to climate change. Over the years, we have endured cyclones, floods and droughts. Unfortunately, the world’s major polluters have failed to contribute to the Loss and Damage Fund, while unyielding colonial financial systems have crippled our ability to tackle the climate and debt crises. It’s time to act. The funds we desperately need to combat the effects of climate change are locked in untapped taxes. Adopting progressive taxation, that doesn’t burden poor countries and communities, can unlock these trillions.”
