Financing Education and All the Other SDGs: Global Taxation is Needed

By Steven J. Klees, University of Maryland.

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NORRAG NEWS 54 on “Education, Training and Agenda 2030: What Progress One Year On?” in now online.

The failure to achieve Education for All and the Millennium Development Goals is liable to be repeated with the Sustainable Development Goals.  At present, we rely on the vagaries of self-interest in the Global North to finance the development gap in the Global South.  This charity model must be replaced by enforceable global taxation.

None of the Education for All (EFA) goals nor the Millennium Development Goals (MDGs) were achieved by 2015.[1] The new Sustainable Development Goals (SDGs) have expanded the EFA and MDG targets and moved the goal-post to 2030. While some argue that we are making progress and that the SDGs represent an enhanced commitment by the international community, I am afraid that the commitment is not there and that we will get to 2030 with none of the goals achieved yet again.

The biggest problem has been and continues to be an unwillingness by the international community to put in the resources required.  It is estimated that an additional $39 billion is needed each year to meet just some of the principal SDG education targets. The Global Partnership for Education (GPE), the big multilateral effort to finance the EFA shortfall, has only been able to come up with $0.5 billion a year; so 80 times more resources are needed!  Moreover, the education SDG is competing with 16 other SDGs. The additional financial requirement for achieving all the SDGs is estimated at $1.4 trillion annually overall. The most optimistic assessments of the potential for domestic revenue mobilization to contribute still leave a gap of $150 billion each year – and that is likely to be a significant underestimate.

A major reason that this shortfall has continued and is likely to continue is that the world is relying on the charity of the Global North to fill the gap in the Global South.  Contributions are completely voluntary.  Every three years GPE begs for “pledges” to fill its coffers.  Overseas Development Aid (ODA) rests on the whims of donor countries.  International agreements, like that made at the U.N. in 1970, set a voluntary goal of rich nations contributing 0.7% of GDP for ODA.  Despite repeated exhortations and renewed “commitments” to it, only a handful of countries reach this 0.7% target and most fall far short. The U.S. spends about 0.13% of its GDP on ODA, less than one-fifth of what has been promised.[2]

One answer to this challenge is to stop relying on global charity – which too often these days is also the neoliberal response within nations trying to fund domestic social services.  What is needed is global taxation, some of which can be implemented within existing national tax structures and some of which need new global structures.  Working with ActionAid International and Oxfam International, I helped put together a background paper on this topic for the International Commission on Financing Global Education Opportunity, aka the Education Commission.  Its principal author, Alex Cobham of the Tax Justice Network, and I examined the potential of corporate taxation, a tax on individual wealth,[3] and a financial transaction tax to not only finance the education deficit but all of the SDGs (Cobham and Klees, 2016).

Our report considers both global reforms to support domestic taxes, and globally-levied taxes. Of the former, reforms can help to address the major losses due to international tax evasion and avoidance. Globally, revenue losses due to multinational corporate tax manipulation are estimated at or above $600 billion annually. Revenue losses on income taxes due to undeclared offshore wealth, meanwhile, are estimated to approach $200 billion. Progress in these two areas – which will depend in large part on global counter-measures – can make a vital contribution to closing the domestic revenue gap.

Of globally-levied taxes, a financial wealth tax, as suggested by Thomas Piketty, has major revenue potential. Levied at 0.01% annually, revenues could cover the estimated requirement for additional public financing of all the SDGs. Levied instead at 1%, revenues might plug the entire incremental financing gap.  A global financial transactions tax could potentially contribute revenues in a range of $60 billion to $360 billion. In each case, international measures to ensure greater transparency could alternatively support the levying of such taxes at the national level.

There are technical and economic problems that must be faced in moving ODA from a charity-base to a tax-base but these can be resolved.  The biggest barriers are political.  For example, OECD has been working on corporate tax reform, but their scope is much less far-reaching than what is needed.  Politically, what is needed is shifting that effort to the U.N. and expanding it.  An appropriately resourced and fully representative, intergovernmental U.N. – based tax body was a central demand of the G77 group of developing countries, and of many civil society organizations from the Global South and North, at the Addis Financing for Development summit in July 2015. Unfortunately, this effort was blocked in Addis by a number of OECD governments.  The establishment of such a body at the U.N. was a key recommendation of our report to the Commission.  Unfortunately, the Commissioners chose not to re-visit the Addis debate.  Nonetheless, the idea still has broad support and momentum; the new chair of the G77 is very much in favour and has made it a priority.

Charity cannot and should not be relied upon to meet the needs of public policy as manifested in the SDGs, as well as in national goals.  Relying on charity, as we have historically, is an abrogation of our collective social responsibilities.  If we want to ensure that the SDGs will not be mostly empty promises, the international community must make an enforceable commitment to put its money where its mouth is.

[1] While some claim that the MDG of cutting extreme poverty in half was met by 2015, this is only true if one continues to use the absurd, outdated, low-ball cutoff of $1.25/day.

[2] It is worth noting that in the late 1940s and early 1950s, as a result of the Marshall Plan, the U.S. was spending as much as 3% of its GDP on ODA in order to help war-torn Europe.  Such an effort is not on the table today.

[3] A tax on individual wealth is made urgent by what I can only call obscene statistics.  Oxfam (2016) reports that the richest 1% own more wealth than the rest of the world combined and that 62 billionaires own as much wealth as the bottom half of the world’s population, 3.6 billion people.

Further reading

Cobham, A. with Klees, S. (2016). Global Taxation: Financing Education and the Other SDGs Background Paper for the Education Commission.

Steven J. Klees, University of Maryland. Email: sklees@umd.edu

This blog reproduces an article in the new issue of NORRAG NEWS, NN54, on “Education, Training and Agenda 2030: What Progress One Year On?”.

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NORRAG (Network for International Policies and Cooperation in Education and Training) is an internationally recognised, multi-stakeholder network which has been seeking to inform, challenge and influence international education and training policies and cooperation for almost 30 years. NORRAG has more than 4,700 registered members worldwide and is free to join. Not a member? Join free here. 

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