Climate Taxes Could Raise $2T Yearly for Vulnerable Communities
Developing nations could potentially raise over $300 billion annually by boosting their tax-to-GDP ratios by 5 percentage points, the report estimates.
BONN, Germany — Fair tax policies targeting wealthy individuals and big polluters could raise over $2 trillion annually to help communities on the front lines of climate change, according to a new report released by ActionAid, writes Winston Mwale.
The report, titled "Finding the Finance: Tax Justice and the Climate Crisis," comes as climate negotiators meet in Bonn to discuss setting a new global climate finance goal ahead of the COP29 summit.
ActionAid's analysis finds that increasing tax-to-GDP ratios by just 4 percentage points in developed countries could generate over $2 trillion per year for international climate finance.
"There's no way around the fact that if we want enough climate action to ensure a safe future, we're going to have to find a way of covering the costs," said Teresa Anderson, ActionAid's global lead on climate justice.
"The good news is that with fair and ambitious taxes that target the biggest polluters, it's entirely possible for wealthy countries to raise the trillions that can give our planet and its people a fighting chance."
The report also highlights how an emerging U.N. tax convention could enable climate-vulnerable developing countries to increase domestic revenues for national climate efforts.
Developing nations could potentially raise over $300 billion annually by boosting their tax-to-GDP ratios by 5 percentage points, the report estimates.
"Countries like Malawi face a double tragedy — debt distress and heightened vulnerability to climate change," said Chikumbutso Ngosi of ActionAid's Malawi office.
"The funds we desperately need to combat the effects of climate change are locked in untapped taxes."
The report calls on institutions like the International Monetary Fund and national finance ministries to implement "ambitious, fair, gender responsive and climate sensitive" tax policies to mobilize critical funding for climate action.