NATIONAL INSTITUTE OF PUBLIC FINANCE AND POLICY (NIPFP)
New Delhi, India
Global Taxes
by
Parthasarathi Shome*
Abstract
This paper argues that environmentally oriented revenue sources are the
preferred option for a global tax reflecting their ability to generate a double
dividend by, first, helping to keep the environment clean with its concomitant
positive impact on community welfare and, second, enabling the use of the
revenue collected to mitigate global developmental concerns. A global carbon
tax with the requirement of a minimum contribution is most suitable among
alternative energy taxes even though global taxes on transport congestion are
also feasible. Global financial transactions taxes—despite their significant
revenue potential—carry the possibility of distorting prices and volumes of
international financial transactions. Based on selected experiences in
international treaty making from the recent past, it is not certain, however, that
either tax would be easy to introduce. Questions also arise regarding their
administration on a global scale unless innovatively designed, regulated and
implemented.
The author is Director, NIPFP. The paper was prepared for presentation at a Meeting
on "New and Innovative Sources OfFinancing Development" organised by the UNDP,
at the United Nations headquarters, New York, October 10-11, 1995. The author
acknowledges helpful comments from the discussant of his paper, Dr. Paul Armington,
World Bank; from several commentators on his paper during the Meeting; and from
his colleagues Dr. Shreekant Gupta, Fellow and In-charge, Environment Economics
Cell; Dr. Rita Pandey, Fellow, Environment Economics Cell; and Professor Indira
Rajaraman, Reserve Bank of India Chair. The opinions expressed in the paper,
however, reflect those of the author and not necessarily those of any other institution
or individual unless otherwise indicated.