måndag 14 december 2009

Tax is the answer for climate financing

No, it is not, but Tax Justice has been making approving comments about what is being hatched in Copenhagen, which should put one on one's guard immediately.

The proposals are for a financial transactions tax and a carbon tax, so that the rich can help the poor. But the likely effects of a financial transactions tax are unpredictable, as the system is a delicately balanced one. An effect of trading at high frequency and volumes is that exchange rates keep within close limits, which probably helps to stabilise the system. But since it is working quite well at the moment and is peripheral to the land-based boom-bust cycle, it sounds like a bad idea to interfere through taxation. In any case, where is the principle behind such a tax?

Taxes on carbon hit those in cold or remote areas the hardest, which adds to congestion in the more populous regions. That is a bad idea. And poor people, being tenants, are not in a position to do much to reduce the size of their heating bills. This sounds like another soak-the-poor scheme dressed up with good intentions.

The Scandinavian countries have been cited as models. However, it is never a good idea to cite them as examples of anything. They have small populations, a large land area and plentiful timber and hydro-electric power, not to mention nuclear power stations - 47% of Sweden's electricity is nuclear.

All talk of rich countries and poor countries ignores the fact that there are poor people in rich countries and rich people in poor countries. Tax normally hits the poor hardest in all countries.

And where will the money go? As always, politicians the world over will grab what they can and syphon it off into their own pockets and those of their cronies. This is money taken from the poor in the first world. Where is the fairness? Where is the justice?

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Cardinal Cormac Murphy O'Connor

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