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Tax Increase To Fund Overseas Developmental Aid?

April 15th, 2008 by James

The next time you buy a plane ticket in Japan, you might discover a new price increase:

A parliamentarian league will propose a new tax on cross-border transactions and economic activities, including airline ticket purchases and currency exchange transactions, to provide revenue for development assistance to poor countries.

The group plans to present a proposal for the new levy ahead of the Group of Eight summit at Lake Toyako in Hokkaido in July.

However, a Finance Ministry official expressed caution, saying that “introducing a new tax will require a certain level of consensus among the public.”

The parliamentary group, headed by Yuji Tsushima, chairman of the Liberal Democratic Party’s research commission on the tax system, was formed in late February. About 50 lawmakers, including tax experts from both the ruling and opposition parties, are members.

For the time being, the parliamentarian group will try to join an international organization with more than 50 member countries that back such “solidarity levies.”

Currently, 28 countries have expressed their intentions to introduce the tax. Eight nations, including France, South Korea and Chile, have already introduced an international solidarity levy on airline tickets. Those levies are directed to international organizations assisting Africa.

Spending decreases caused Japan to drop to fifth place in the ranking of top developmental aid donor countries in 2007, its lowest position since 1972.

Would you support such a tax increase?
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10 Comments »

Comment by lordmetroid
2008-04-15 03:44:05

Great, tax the people and give it to a foreign government. Nice thinking! Nahh, ridiculus. Isn’t the situation with old people bad enough? Is it really wise to give taxes to people outside of the country when one has such pressing issues…

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Comment by Alec
2008-04-15 10:07:11

Give a man a fish vs teaching him to fish. No matter how much money we’ve poured into Africa, they’re not going anywhere. They need to sort out their political system and their economics will shortly follow.

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Comment by frenchie
2008-04-16 11:21:24

Nowhere in the article is Africa referred to in particular. Aid does not equal Africa.

Africa is not the only continent that receives development aid, and is not the only continent with poor countries. There still are many Asian, Latin-American and even European countries who receive development aid too (from the European union, countries like Spain received dozens of billions to have their economies catch up when they joined, and all the new members will recive lots of monies too)

And as for development aid and Africa, many countries actually overstate how much money they send, sometimes less than 50% of the number given is actually sent (one of the worst offenders is France, my government counts things like promotion of the French language and French culture as well as welcoming of foreign exchange students as part of the development money)

No matter how much money we’ve poured into Africa, they’re not going anywhere.

Just like, both in Asia and South-America there are basket cases like Myanmar or Venezuela as well as success stories, the same applies to Africa.

Botswana has had an average economic growth of 9% per annum between 1966 and 1999, and a few years back, credit agencies gave them a higher rating than Japan.

Southern Africa in general is doing better than francophone West Africa.
Kenyan exports of roses are nearly as important as tea now. Car and electronics assembly plants are sprouting up in the region. And Goldman Sachs included Nigeria in their Next Eleven report of developing countries who show high potential, just after the 4 BRIC (Brazil, Russia, India, China).

Also, who is “we”? Have you personally given money to African countries or aid agencies? Proportionally speaking the US govt. is far from generous, actually it is damn right stingy compared to Gulf countries.

The United States is the world’s largest contributor of ODA in absolute terms ($15.7 billion, 2003), but the smallest among developed countries as a percentage of its GDP (0.14% in 2003). Among developed and developing nations, Saudi Arabia’s ODA volume is second only to the USA.[3] As percentage of GDP, Arab states of the Persian Gulf are the most generous, with Kuwait contributing 8.2% of its gross national product and Saudi Arabia contributing 4% in 2002.[4] [...]

In the United States, popular estimates of spending on aid are often highly inflated. Surveys show that people typically think about 20% of the federal budget is spent on aid; the real number a little less than 1%.[5] In absolute terms, the $15-20bn of aid compares with $50bn spent annually on the war on drugs and $500bn spent on the military.
(source:http://en.wikipedia.org/wiki/Development_aid)

That’s real generous.

And the development problems of many African countries are not so much linked with bad governance but more with liberalism. If good or bad gouvernance was so important, then theorically, democratic India should be doing much much better than autocratic China, yet right now, she is trailing behind.

Every single country that is developped right now has used protectionism extensively in the beginning, but right now there is a global move towards developping countries dominishing their trade barriers, protecting patents etc. and the countries wich do best, coincidentally, like China, have an extensive control of their internal market, foreign investment, capital flows etc.

50 years in the past, everyone laughed at the idea of Japanese cars, Japanese people included, and there were calls to stop protecting the car industry (the Japanese government had kicked out foreign car makers from the ocuntry and hevaily protected local companies who made sustandard cars at first) saying it was useless, fast forward now, the Japanese car industry is world class and doesn’t need to be protected anymore. But it would never have existed had American companies like Ford or GM been allowed to rule the Japanese market.

Also, during much of its development, Switzerland din’t recognize patents for example, and many inudstrial innovations were copied, same in the US with copyrights, and until after WWII, the US applied extremely high tarrifs (25% to 40%) on importations.

In contrast, the US govt has been pushing at WTO for 3 to 7% tarrifs worldwide. The gap between poorer and richer countries has gotten only wider, such low tarrifs would procede to definitely wipe out any chance of industrialization in many countries, and will lock them in poverty cycles.

Developped countries are trying to kick away the ladder they used to become developped and preaching for a way of development they never used until they were relatively developped.

That’s not anti-globalization BS by tree hugging hippies who know nothing about economics(like José Bové my felow countryman), it’s a Cambridge economist who witnessed firsthand how his native South Korea developped behind protectionnist measures, who wrote several books on the subject. Here’s an article by him:
http://www.independent.co.uk/news/business/comment/hajoon-chang-protectionism-the-truth-is-on-a-10-bill-458396.html

His latest book:
http://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596913991

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Comment by frenchie
2008-04-16 11:23:07

woah, my comment looks weird, I misused the HTML!

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(Comments wont nest below this level)
 
 
 
Comment by Level3
2008-04-15 10:16:21

So next time I go home for a funeral, it will be more expensive and they’ll throw the money away in some Third World cesspool to, in the end, fund some dictator’s palace and/or military?

I’m sure there’ll be a special exemption for Japanese lawmakers on “political” trips, especially to Thailand.

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Comment by love/hate me
2008-04-15 11:08:58

This Tax is a ‘forced charity’ of some sorts. However the problem with the act of giving and receiving charity is that it often implies that the receiver is in some way inferior to the giver.
In the spirit of real charity, generosity or genuine sympathy with the suffering of other should be something that comes naturally from within the giver. Forcing people to ‘donate’ money to third world countries does not fully address the problems that this tax is intended to solve.
If any people, if any government was truely genuine in their sympathy with the suffering of others then they would ensure that their methods would not mislead the receivers into believing that this is charity of indifference or apathy.

Gov-”we want to show that we care but we will let the people pay for it.”

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Comment by love/hate me
2008-04-15 11:11:15

This Tax is a ‘forced charity’ of some sorts. However the problem with the act of giving and receiving charity is that it often implies that the receiver is in some way inferior to the giver.
In the spirit of real charity, generosity or genuine sympathy with the suffering of other should be something that comes naturally from within the giver. Forcing people to ‘donate’ money to third world countries does not fully address the problems that this tax is intended to solve.
If any people, if any government/organisation was truely genuine in their sympathy with the suffering of others then they would ensure that their methods would not mislead the receivers into believing that this is charity of indifference or apathy.

Parlimentary Group-”we want to show that we care but let us make the people pay for it.”

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Comment by dood
2008-04-15 12:34:29

Barred by Article 9 of its constitution from maintaining an offensive military capability, and having been so far unsuccessful in its lobbying efforts for a permanent seat on the U.N. Security Council, Japan has had to lean heavily on its aid for diplomatic clout.

But despite being confronted with the prospect of an increasingly powerful neighbor, the Japanese government announced in December it was cutting ODA by 4 percent in fiscal 2008.

According to various polls, the cuts in ODA have been supported by public opinion,” Kawabe says. “Japanese people tend to think that Japan has been discriminated against. It’s the second largest economy, but it doesn’t have much power relative to its economic power.”

I had the impression that Japan was part of the Security Council, I thought that since China is, surely Japan is as well. Looks like I was wrong though.

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Comment by dood
2008-04-15 12:37:36

Barred by Article 9 of its constitution from maintaining an offensive military capability, and having been so far unsuccessful in its lobbying efforts for a permanent seat on the U.N. Security Council, Japan has had to lean heavily on its aid for diplomatic clout.

But despite being confronted with the prospect of an increasingly powerful neighbor, the Japanese government announced in December it was cutting ODA by 4 percent in fiscal 2008.

According to various polls, the cuts in ODA have been supported by public opinion,” Kawabe says. “Japanese people tend to think that Japan has been discriminated against. It’s the second largest economy, but it doesn’t have much power relative to its economic power.”

I had the impression that Japan was part of the Security Council, I thought that since China is, surely Japan is as well. Looks like I was wrong though.

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Comment by morningstar
2008-04-16 10:29:51

Japan is already too high a Tax . The citizens need a help . No to increase in Taxes.

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