UNITED NATIONS -- In late 2008, the World Health Organization assembled a panel of 25 experts and tasked them with coming up with new ways to fund medical research and development in poor countries.
Today, as the UN's public health arm assembles in Geneva for its annual weeklong World Health Assembly, their final proposals are up for discussion. The panel, composed of internationally recognized policy makers and technical experts, suggests a variety of indirect taxes that could potentially raise "very significant" amounts of revenue.
One idea -- a 10 percent tax on international arms sales -- is estimated to have the potential to net up to $5 billion dollars annually.
Another proposes adding a surcharge on airline tickets, a method already proven to work based on the $1 billion raised by UNITAID to treat AIDS, malaria, and tuberculosis since September 2006. This might be the easiest tax proposal to sell to the 193 WHO member states, since 13 countries have already passed the necessary legislation and several are in the process of doing so.
A third suggestion -- to tax international financial transactions -- is also viewed as promising. A few years ago, Brazil introduced a 0.38 percent tax levied on paying bills online and on big cash withdrawals. It has reportedly raised $20 billion a year -- enough to fund 87 percent of the government’s key social-protection programs.
The last idea -- a "digital" or “bit” tax that would gain revenue through Internet usage -- would appear to have the greatest potential impact on the pocketbooks of global citizens. There is no agreed principle about how this tax might be implemented, but think of it in “clicks." Ten clicks with a mouse while surfing the Internet could bring in one cent of tax revenue, for example. With billions of users navigating the web, this could yield tens of billions of dollars.
'Pretty Sketchy'
Even the suggestion of such taxes has ignited passionate responses. Proponents see them as a painless ways for taxpayers in rich countries to support medical research in poorer ones. Skeptics doubt if they'll work and question the ability or credibility of the WHO to be the initiator of global tax schemes.
One member of the experts panel, Dr. Mary Moran of the George Institute for International Health in Sydney, Australia, stresses to RFE/RL that these are only “suggestions” and that it’s up to the WHO to decide how to proceed.
“I just want to emphasize that we recommend approaches, not proposals, because the proposals were pretty sketchy, some of them," Moran says. "You know, it says, let’s have a...digital tax. You'd have to do an enormous amount of work to find out whether you could do it, how much it would raise, how you charge it, how you do it? Each of these has a lot of work behind it which needs to be done before any decision is made.”
The WHO envisions the potential schemes as temporary measures only. But in a world of growing financial uncertainty, experts believe, the WHO will take the new taxes approach quite seriously.
Skeptical Of The Merits
Roger Bate, who is a fellow on international health policy at the American Enterprise Institute in Washington, tells RFE/RL that a major concern among the skeptics is that once such taxes are introduced, they would remain permanently.
"Through history we’ve seen that once taxes are put in place they’re hardly ever repealed," Bate says. "So you need to be sure that this is not only of short-run benefit but that it’s not going to disincentivize whatever you’re taxing -- that the harms of doing that are not necessarily going to be significant.”
Bate says these tax incentives should be and will be debated during this week's assembly, but he says he is skeptical about the merits of the proposals because they ignore a basic covenant of the medical research and development process.
"What I think these proposals ignore is they are, broadly speaking, pretty socialist in the sense that they want to decouple corporate types of business incentives from the production of vital medicines," Bate says. "If you look at the history of medicines’ development, nearly all of them have been discovered by people wanting to make money. And I think most people who are interested in public health find this distasteful. So they’re always trying to find new ways of funding research and development which are not related to profit.”
The experts panel acknowledges the difficulty of bringing the 193 WHO member states to a mutual consensus on tax proposals. Moran says attitudes to taxation vary significantly from country to country.
“For example, the U.K. is unlikely to support a new tax, and different governments have different budgetary cycles and different tax systems and objectives," Moran says. "We imagine that different governments will pick different things and some will support a tax and some won’t.”
During this week's assembly, the experts panel report will be taken into consideration by the World Health Assembly and then sent for endorsement to the Executive Board. Once the recommendations are given full legitimacy by the WHO, serious lobbying efforts would be expected to convince governments of the feasibility of introducing and implementing these new taxes.
Today, as the UN's public health arm assembles in Geneva for its annual weeklong World Health Assembly, their final proposals are up for discussion. The panel, composed of internationally recognized policy makers and technical experts, suggests a variety of indirect taxes that could potentially raise "very significant" amounts of revenue.
One idea -- a 10 percent tax on international arms sales -- is estimated to have the potential to net up to $5 billion dollars annually.
Another proposes adding a surcharge on airline tickets, a method already proven to work based on the $1 billion raised by UNITAID to treat AIDS, malaria, and tuberculosis since September 2006. This might be the easiest tax proposal to sell to the 193 WHO member states, since 13 countries have already passed the necessary legislation and several are in the process of doing so.
A third suggestion -- to tax international financial transactions -- is also viewed as promising. A few years ago, Brazil introduced a 0.38 percent tax levied on paying bills online and on big cash withdrawals. It has reportedly raised $20 billion a year -- enough to fund 87 percent of the government’s key social-protection programs.
The last idea -- a "digital" or “bit” tax that would gain revenue through Internet usage -- would appear to have the greatest potential impact on the pocketbooks of global citizens. There is no agreed principle about how this tax might be implemented, but think of it in “clicks." Ten clicks with a mouse while surfing the Internet could bring in one cent of tax revenue, for example. With billions of users navigating the web, this could yield tens of billions of dollars.
'Pretty Sketchy'
Even the suggestion of such taxes has ignited passionate responses. Proponents see them as a painless ways for taxpayers in rich countries to support medical research in poorer ones. Skeptics doubt if they'll work and question the ability or credibility of the WHO to be the initiator of global tax schemes.
One member of the experts panel, Dr. Mary Moran of the George Institute for International Health in Sydney, Australia, stresses to RFE/RL that these are only “suggestions” and that it’s up to the WHO to decide how to proceed.
“I just want to emphasize that we recommend approaches, not proposals, because the proposals were pretty sketchy, some of them," Moran says. "You know, it says, let’s have a...digital tax. You'd have to do an enormous amount of work to find out whether you could do it, how much it would raise, how you charge it, how you do it? Each of these has a lot of work behind it which needs to be done before any decision is made.”
The WHO envisions the potential schemes as temporary measures only. But in a world of growing financial uncertainty, experts believe, the WHO will take the new taxes approach quite seriously.
Skeptical Of The Merits
Roger Bate, who is a fellow on international health policy at the American Enterprise Institute in Washington, tells RFE/RL that a major concern among the skeptics is that once such taxes are introduced, they would remain permanently.
"Through history we’ve seen that once taxes are put in place they’re hardly ever repealed," Bate says. "So you need to be sure that this is not only of short-run benefit but that it’s not going to disincentivize whatever you’re taxing -- that the harms of doing that are not necessarily going to be significant.”
Bate says these tax incentives should be and will be debated during this week's assembly, but he says he is skeptical about the merits of the proposals because they ignore a basic covenant of the medical research and development process.
"What I think these proposals ignore is they are, broadly speaking, pretty socialist in the sense that they want to decouple corporate types of business incentives from the production of vital medicines," Bate says. "If you look at the history of medicines’ development, nearly all of them have been discovered by people wanting to make money. And I think most people who are interested in public health find this distasteful. So they’re always trying to find new ways of funding research and development which are not related to profit.”
The experts panel acknowledges the difficulty of bringing the 193 WHO member states to a mutual consensus on tax proposals. Moran says attitudes to taxation vary significantly from country to country.
“For example, the U.K. is unlikely to support a new tax, and different governments have different budgetary cycles and different tax systems and objectives," Moran says. "We imagine that different governments will pick different things and some will support a tax and some won’t.”
During this week's assembly, the experts panel report will be taken into consideration by the World Health Assembly and then sent for endorsement to the Executive Board. Once the recommendations are given full legitimacy by the WHO, serious lobbying efforts would be expected to convince governments of the feasibility of introducing and implementing these new taxes.
