procedures such as fuel purchase invoice requirements; (4) developing a mechanism for and
carrying out selective audits; (5) establishing and practising modes of interagency cooperation;
and (6) enforcing criminal penalties.
As country finances get inextricably interrelated, with increasing transboundary tax
incidence effects often necessitating intercountry cooperation on tax and tax evasion matters,
perhaps the need for a global tax administration—rather than a continuance of exclusive
dependence on bilateral tax treaties—also increases. While this has obvious pecuniary and
opportunity costs—higher expenditure of global monies and another international bureaucracy—
its benefits may compensate the costs. Existing multilateral institutions whose mandates
comprise mainly international monetary stabilisation perhaps should not be burdened with
additional tasks even as the complexities in world financial markets increase in phenomenal
ways. A new, autonomous and streamlined global tax administration, therefore, deserves
serious consideration.
VIL Concluding Remarks
This paper explored the possibility of introducing a global tax or selected global taxes,
the revenue from which could be used for addressing global objectives such as poverty
alleviation, environmental improvement, or space exploration. It considered a global tax on
carbon emissions, a tax on congestion caused by international transport, and a tax on
international currency conversions (the Tobin tax). The first two have a double dividend—
they not only generate revenue but also correct distortions by internalising disextemalities.
The Tobin tax, while possessing some revenue potential, would tend to distort market
transactions in foreign currency and could affect international financial flows. Nevertheless,
if a global tax is considered to have become necessary to meet global objectives, one on
currency conversions may have to be introduced if there are no other possibilities. However,
one might question why the world would need to restrict itself only to the volume of currency
conversions for a global tax base. If distortions are not a consideration, other alternatives, that
would also raise some revenue, come to mind (Shome, 1995). The magic of the carbon tax,
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