Financial Transaction Tax and Aid Effectiveness: key moments and asks

November 1, 2011

Posted by Olga Golichenko

Action for Global Health Advocacy Officer

This November provides decision-makers with two opportunities to make decisions which could make a huge difference to development and global health programmes.

G-20 and High Level Meeting on Aid Effectiveness

The first key moment is the G-20 summit taking place in France on 3-4 November, 2011. The financial transaction tax (FTT) is high on the agenda. Billions could be raised for development and the health of the world’s poorest if a financial transaction tax was adopted by a coalition of willing countries through G-20 agreement.

The second key event is the 4th High Level Meeting on Aid Effectiveness, in Busan, South Korea (29 November – 1 December). The governments present, with Hillary Clinton’s participation, will review the progress of recent efforts to improve the effectiveness of aid and will identify commitments to continue these efforts into the future. Aid delivery systems could be improved if governments provide stronger commitments to implement the aid effectiveness principles of: ownership, alignment, harmonisation, delivering for results and mutual accountability.

What are the links?

Innovative sources of financing and aid effectiveness are closely linked. More resources need to be raised to improve the health of the world’s poorest people. At the same time donors, governments and civil society need to ensure that key aid effectiveness principles are applied in the use of funds.

A financial transaction tax should be approved during the 2012 G-20 by a coalition of willing countries

Between 2009 and 2015 there is an estimated $488 billion gap in resources to support health of the poorest, including a $125 billion gap for responding to HIV and AIDS. An FTT could make a huge difference to this.

An FTT has received a lot of influential support, including that of the Pope, Nicolas Sarkozy, Angela Merkel, Bill Gates, and the European Commission (EC). Recently over 1,000 MPs and 1,000 leading economists from over 30 countries signed petitions supporting an FTT. However, there is serious concern over the EC’s proposal to spend all FTT revenues on the European budget, leaving none for climate, development or global health. It is crucial that, if an FTT goes ahead as a G-20 initiative, at least 50% of the resulting funds are allocated to supporting global work on international development, global health and other priorities.

An FTT is supported by a global movement of campaigns in more than 25 countries around the world with millions of supporters. Most recently, the Occupy Movement, a social and economic justice movement, which has mobilised over a million of people internationally, supported Robin Hood Tax in some of its locations, you can read more here.

Financial Transaction Tax and the Alliance

The Alliance has long been working on mobilising resources for HIV and AIDS through innovative sources of financing. In 2006 the Alliance contributed to development UNITAID, one of the first innovative health financing mechanisms.

The Alliance has been advocating for governments to support an FTT as a member of the Robin Hood Tax campaign since 2008. The Robin Hood UK campaign advocates that 50% of revenues from an FTT should go to domestic needs and 50 percent should be spent on global issues (25% on global health and development, 25% on climate change). The Alliance sits on the steering group of the campaign and ensures health messages and priorities are integrated in the campaign’s work.  Globally, Alliance India and Brazil have been lobbying their national governments to support an FTT and we have been advocating the government of South Africa to back an FTT. Stop Aids Alliance, a partnership between the Alliance and Stop Aids Now, has been conducting extensive advocacy work in Brussels to get European Commission support for an FTT.

Aid effectiveness: the need for more country ownership, communities participation and investment in evidence based interventions

Latest reviews on the progress of aid effectiveness agenda implementation demonstrate that some progress has been achieved, however it has not happened as quickly as planned. The Alliance has been involved in this work through its participation in cross-European global health network, Action for Global Health.

There are a lot of contentious issues which attendees will try to resolve during the High Level Meeting on Aid Effectiveness. What matters most is to have an efficient international and national accountability structure that will make development stakeholders accountable for old and new commitments to improve the lives of the world’s poorest.

Aid Effectiveness and the Alliance

The Alliance has been implementing the aid effectiveness principle of ownership by putting affected communities at the centre of HIV/AIDS response.  The Alliance publishes its data using the International Aid Transparency Initiative standards to ensure accountability and transparency of its programmes.  The Alliance is at the forefront of developing methodologies for evaluating the impact and value for money of its programmes. This helps to ensure that the aid effectiveness principle of managing for results is implemented. The Alliance’s key experiences and lessons learnt on implementation of aid effectiveness are outlined in the e-poster which will be presented at the High Level Meeting on Aid Effectiveness.

Key things the Alliance will be asking for ahead of Busan include:
•    Investment in community-based responses to ensure increased and more equitable access to HIV and health services.
•    Promotion of an enabling environment by having legal frameworks in place that guarantee the space, transparency and conditions necessary for civil society to meaningfully participate in aid delivery processes in order to achieve increased impact
•    Use of evidence generated by the HIV and health sector, particularly on community involvement, methodologies for evaluating value for money of programmes and the Strategic Investment Framework to improve effectiveness of aid.
•    Application of lessons learned from the HIV and health sector on how to improve alignment to national plans, budgets and M&E frameworks, such as the Three Ones and the IHP+ to inform other sectors and wider development.

Take action

Although the time is short before the G-20, you can still make a difference. Take action today and  sign the international petition is support of the Financial Transaction Tax.

You can learn more about 4th High Level Meeting at Aid Effectiveness here

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