Seven Innovative Mechanisms of Development Finance

As governments look for new options for public revenue stream, this table by IPS Global Economy project director Sarah Anderson shows which options can be considered, their potential revenue, and their administrative and political feasibility.

April 18, 2011
Sarah Anderson

The .pdf file is available for free download here. This table file describes seven innovative mechanisms for public revenue streams.They are:

1. Financial Transactions Tax (FTT): A small tax on each trade of stocks, derivatives, currency, and other financial instruments.

2. Currency Transactions Tax: A form of FTT that places a tax on foreign exchange transactions and their derivatives and is collected at the point of settlement.

3. Special Drawing Rights: Utilization of the IMF’s reserve assets, which are allocated to countries based on the IMF quota system and can be converted to hard currency to be used for any purpose. (Important to note that with conversion of SDRs to cash an interest rate is incurred).

4. Redirecting Fossil Fuel Subsidies: Governments would eliminate tax breaks, subsidies and other supports to the fossil fuel industry and channel the equivalent amount of funds into development.

5. Transportation levies: Aviation and shipping fuel emission taxes.

6. Carbon taxes: Requires a fee for every ton of CO2 emitted.

7. Curtailing illicit money flows out of developing countries: Increased transparency rules for illicit flows, which involve capital that is ilegally earned, transferred, or utilized.

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