Currency Transaction levy (CTL) could finance countries to meet MDGs for Health

The pressure is mounting with Stamp Out Poverty taking a lead with organizations from around the world in advocating for a Currency Transaction Levy (CTL) for Health, which when applied to the four major currencies (US dollar, Yen, Euro and British pound) could potentially raise up to USD 33 billion a year. This will raise sufficient finances to meet the Millennium Development Goals (MDGs) for health, namely to reduce child mortality, improve maternal health and combat the major diseases by 2015 (MDG numbers 4, 5 and 6).

The estimates that the CTL for Health, when applied to the four major currencies could raise up to USD 33 billion a year, don't distort the financial markets, and thus provide an additional, predictable and sustainable source for funding. More information is available online at: www.stampoutpoverty.org

Stamp Out Poverty is a network made up of more than 40 UK charities, trade unions and faith groups that has been working on measures to help fund the finance gap required to pay for the Millennium Development Goals and is increasingly concerned with how the substantial costs of climate change are going to be met. Its flagship campaign is for a Currency Transaction Tax (CTL), where it has lead the way in commissioning work to demonstrate the feasibility of the proposal when applied at a very low rate for the purpose of raising additional revenue for the alleviation of poverty.

In the run-up to the Group of Twenty countries (G-20) meeting later this month, the campaign is seeking endorsements from organizations in support of the Declaration of the Global Campaign for a Currency Transaction Levy for Health. This initiative is geared to push governments to take the necessary steps to introduce such a CTL levy, and make sure the benefits are dedicated to reach the health MDGs.

The Campaign acknowledges that neither allocated nor committed levels of Official Development Assistance (ODA) and domestic financing are sufficient to meet these MDG targets related to health, a situation compounded by the global financial crisis, which is severely affecting the poorest countries in the world.

The campaign call upon donors to keep their commitments to allocate 0.7% of their national budgets to ODA and that African countries, similarly, honour their Abuja Declaration pledge to commit at least 15% of their national budgets to health.

The campaign is committed to locating and harnessing additional, new and predictable income streams that are capable of meeting funding shortfalls. A Currency Transaction Levy (CTL) has the potential to raise revenue of at least USD 33 billion a year on a sustainable, predictable and on-going basis from the foreign exchange (fx) market, that has not been privy to levies or taxation to date.

The CTL is technically simple to implement: the foreign exchange market is fully electronic, revenue collection would be automatic, with no scope for avoidance.

At the proposed low rate of 0.005%, the foreign exchange market would not be adversely affected whilst at the same time significant income would be generated.

The CTL would be applied to the wholesale foreign exchange market only, and not affect the retail market nor have an impact on migrant remittances.

The proceeds of the CTL should benefit the health MDGs, most notably MDGs 4 and 5 on maternal and child health, which are seriously under-resourced, and Universal Access to HIV, TB and malaria prevention, treatment, care and support. The international community currently has the mechanisms in place to channel the funds and rapidly scale up interventions, (e.g., through the GAVI Alliance, the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) and UNITAID).

The campaign is so far supported by the Africa Japan Forum, Japan; PLUS Coalition, France; Health GAP, USA; Family Care International, USA; International HIV/AIDS Alliance, UK; International Civil Society Support, Netherlands; Partners in Health, USA; Physicians for Human Rights, USA; RESULTS, USA; Stamp Out Poverty, UK; Stop AIDS Campaign, UK; Treatment Action Group, USA among others.

Bobby Ramakant
(The author is a World Health Organization (WHO) Director-General's WNTD Awardee (2008), and writes extensively on health and development. Email: [email protected])