Monday, 31 October 2011

If environmental taxes are such a good idea why have they not been implemented?

By Stephen Spratt

A couple of weeks ago I attended the 12th Annual Environmental Taxation Conference, which this year was held in Madrid. This was a fascinating event from which I learned a huge amount.

Why should countries implement environmental taxation?

This was the first time I had attended this conference, and – despite its high quality – I came away a little less optimistic about the prospects for environmental taxation than when I arrived.

This had nothing to do with the strength of the broad case in favour:
  • Taxing ‘bads’, such as pollution, so that taxes can be reduced on ‘goods’ such as employment, which is obviously a good idea
  • Broadening the tax base in ways that boost tax revenues overall, in both developed countries (under severe fiscal strain) and developing countries (with relatively low total tax takes), also makes sense. If you have to tax something – which you do – using mechanisms that also reduce environmentally damaging activity is a good place to start.
Neither was my pessimism borne of technical or ethical concerns:
  • From transport to natural resources, to energy and low carbon development, a wealth of scholarship underpins an impressive understanding of how to design and implement environmental taxes
  • Similarly, issues of equity were addressed in detail, with palpable concern that mechanisms should not adversely affect the poor informing much of this work.
It seemed to me that – in developed countries at least – environmental tax experts have a good grasp of the policy options and their broader implications, particularly where and how environmental taxes should be implemented, and the criteria we should use for assessing this.

So why the pessimism on my part?

Nobody mentioned public opinion...despite the attractiveness of green taxes, no country has implemented them to anything like the extent they could. They remain a small fraction of government revenues, even in the most enthusiastic countries.

Share of Environment Taxes in the Total Tax Revenue in 1995 and 2005
 * Source: European Environment Agency

Nobody likes taxes, but environmental taxes are particularly disliked. It is not clear why this should be, but it is a fact. This is documented well by the 2009 Green Tax Report from the Chartered Institute of Taxation’s – check out section 5.4 Public Perceptions of Environmental Taxes.

A topical example of the intense distrust of environmental taxation is this: Australian ‘Carbon Tax’ Wildly Unpopular.

What, if anything, might be done about this?
  1. Part of the problem seems to be a suspicion that environmental taxes are not really about the environment at all, but about raising revenues. There is certainly an element of truth in this, and if the goal of a tax is to raise revenue, policy makers should say so.
  2. Another option is earmarking – or ‘hypothecation’ as it is known in the trade. Tax experts are generally against the suggestions that taxes should be spent on particular things, rather than go into general coffers. While there are good reasons for this, they are not as important as the need to build and maintain public support for such measures – dedicating at least a share of revenues to complementary environmental goals might help in this respect.
Many developing countries have implemented environmental taxes, and many more are considering doing so. There are more outstanding technical and ethical issues than is the case for developed countries, but even if these are resolved the question of public opinion will remain. There is no reason to assume that environmental taxes will be any more popular in low and middle income countries than they are in high income countries. If these mechanisms are to have any chance of fulfilling their undoubted potential, this needs to be addressed directly, and not swept under the carpet as if it does not matter.

* European Environment Agency (2009), Share of Environment Taxes in the Total Tax Revenue in 1995 and 2005, (accessed on 31 October 2011)

Friday, 28 October 2011

From farm to fork

By John Humphrey

In my previous blog post I mentioned I would be taking part in a panel hosted by Business Fights Poverty, talking about ways of ‘harnessing value chains and private sector innovation to boost nutrition.’ I sat with Marc van Ameringen from the Global Alliance for Improved Nutrition (GAIN) and Miguel Pestana from Unilever.

The key issues that arose:
  • How can we close the gap between the farm and finger?
There was some divergence of opinion on this. I focused on how to close the gap between farm and the undernourished populations needing more nutritious food. Miguel Pestana from Unilever rightly observed that just focusing on the value chain ignored issues such as sanitation (and some great work is being done at IDS on community-led approaches to improving sanitation) health services and infrastructure. The unresolved question is that while narrowly focused approaches do miss some important determinants of outcomes, the broader the approach, the more the risk that small advances are not made.
  • How do we keep the private sector engaged?
This is a tricky one. To some extent, regulations should be put in place to ensure standards. But there is still the question of incentivising companies to engage in the process of buying and selling nutritious products to the poor. Can companies make a profit from reducing hunger and undernourishment? Bottom of the Pyramid is a great idea, but how well does it really work? And if it doesn't, what we do about it?
  • Finding out what works
The monitoring and evaluation of new initiatives is essential, as from there we can assess how best to take this forward, we are still in very early days. Getting food to those that need it the most is not a new question – agriculture-nutrition linkages has been discussed for a long time, with distinguished contributions from IDS Fellows – but the approach of looking at value chains and the private sector is new territory, and assessments of different value chain initiatives and between these and other approaches (fortification, feeding programmes, etc.) need to be made systematically.

Thursday, 20 October 2011

Conflicting interests? How businesses operate in areas of conflict

By Vivienne Benson

Our Business and Development Seminar Series this term is ‘Conflicting Interests: How Businesses Operate in Areas of Conflict,’ – it begins on 25 October.

Mike Davis, Campaigner from NGO Global Witness will be addressing ‘Breaking the Links between Commerce and Conflict,’ at the first seminar. Global Witness have conducted international campaigns against natural resource-related corruption and conflict using a number of countries as case studies – including Burma, Indonesia, Liberia, Sudan, Zimbabwe, Equatorial Guinea, Turkmenistan, and the Ukraine. In particular, Global Witness was part of the coalition that campaigned for the creation of the Extractives Industries Transparency Initiative.

The issue of the ethics of businesses working in the extractive industry in countries of conflict is obviously a hot one. Huge amounts of natural resources are often located in these parts of the world, and they can often be the fuel for, or the currency in, conflict. Discussing this during the seminar series is Edward O’Keefe from Synergy Global, and Aidan Davy from the International Council on Mining and Metals (ICMM).

Synergy Global works with companies, governments and NGOs, focusing on the management of social issues surrounding large-scale commercial projects, particularly in the extractive sector.

Also speaking at the series is Kate Meagher from the London School of Economics (LSE), and Hugh Elliott, International Government Relations Manager from Anglo American.

As before, this series will address many questions; however it will undoubtedly raise many more. Businesses working in the developing world continues to be a controversial subject. Are companies exploiting vulnerable areas for their own gain or are they bringing wealth and enterprise to support communities in bringing themselves out of poverty?

Sunday, 16 October 2011

World Food Day: Quantity AND Quality

By John Humphrey

I have been looking through the Issues Paper produced by FAO for World Food Day. This year, the theme is food price volatility and what should be done about it. There is a lot of good material about some of the determinants of food price volatility, the impacts and some initiatives to counter these negative impacts.

I have recently ventured into the world of health, nutrition and agriculture-nutrition linkages, having previously conducted research on agricultural production and agri-food value chains. As a result, I am probably suffering from "convert zeal". Nevertheless, I am struck by the extent to which the food problem is defined in quantitative terms:
  • There is not enough food
  • We need to produce more food by increasing investment, improving technology and reducing production of (and incentives for) non-food agricultural crops, particularly biofuels.
No-one is likely to argue that food availability is unimportant, although there are intense debates about the importance of global food availability and the access of the hungry to this food. But, a recent visit to Bangladesh highlighted to me what many food and nutrition specialists have been saying for a long time – a country can be very successful in increasing production and productivity of basic grains such as rice, but on its own this will not solve problems of undernourishment and access.
  • Undernourishment is still a massive problem in Bangladesh, in spite of significant improvements in rice production.  This is because, contrary to what one might think, these improvements do not translate very directly into more varied diets and improvements in indicators of undernutrition.
  • Greater availability and access to staple foods needs to be complemented by greater consumption of foods that have the vitamins, minerals and proteins essential for health. This means not only increasing production of more diverse and nutritious foods, but also ensuring that that undernourished people gain access to them.
The lesson is that the world food challenge is one of quality as well as quantity. Diversifying diets and ensuring that nutritious food gets to the populations that most need it is as big a challenge as producing enough calories to feed the world.

On 26 October, I will be joining speakers from the Global Alliance for Improved Nutrition (GAIN), and Unilever to talk about establishing better linkages between agricultural programmes and nutrition programmes and the ways in which businesses can contribute to promoting the production and consumption of nutritious food. The seminar “Harnessing Value Chains and Private Sector Innovation to Boost Nutrition” is promoted by Business Action for Africa in London.

*Please go to the Business Fights Poverty website to register for the event.

Friday, 14 October 2011

Do we care about development when times are tough?

By Spencer Henson

Media commentary across many of the traditional donor countries suggests that aid budgets are under pressure and that tax payers in many of these countries are at best ambivalent about development assistance. 

There is a broad political consensus for increases in aid spending in the UK, despite deep cuts in most other areas of public expenditure.  However, results from the UK Public Opinion Monitor (UKPOM), an ongoing IDS survey aiming to understand public attitudes to development, suggest the public think aid should be cut. The UK government has countered that we in the rich world have a moral obligation to help the World’s poor.  Although, it is not clear that the UK public are listening.

But are our concerns about the poor really so fickle? 

Do we really believe that we can only ‘afford’ to help the poor when times are good, whilst ‘looking after number one’ when times are tough.  It is a more complicated than that: 
  • On the one hand, results from the UKPOM suggest that we continue to be concerned about poverty ‘at home’.  When times are tough and when more of the people that live near to us are struggling, UK poverty is given greater priority. 
  • On the other, the UKPOM also suggests that public engagement with charities that work in developing countries has held up under current conditions of austerity.  Indeed, more people seem to give regularly to international development than many other ‘good causes’, and causes that might be of benefit to them themselves. 
Of course, periodic appeals for money when humanitarian crises strike play a big role here; and there have been a number of these in the last year or two.  But this hardly suggests that we in the rich world ‘don’t care’ about the plight of those in the poorest parts of the world.

Looking beyond the current economic plight of many people in the UK provides a far more ‘rosy’ picture.  Broadly, people agree with the government - we do have a moral obligation to help those in the poorest parts of the world. 

The UKPOM also suggests that there is stronger support for increases in aid spending in the longer term.  However, many people remain sceptical as to whether aid works, even if they can see beyond the stereotype of stashes of cash in Swiss bank accounts.  This requires that we have positive evidence of what works (and what doesn’t) and are prepared to share it with the world in a way that is easy to comprehend and that grabs attention.

Tuesday, 11 October 2011

Business minded: IDS at the party conferences

By Vivienne Benson

IDS has hosted a fringe event at all three party conferences in the last month asking the question 'is business the new aid?' - have a listen to the discussions that took place at the Liberal Democrat and the Conservative events.

Today, Zahid Torres-Rahman, Founding Director of Business Action for Africa and Business Fights Poverty posted his thoughts on the IDS panels that he partook in for the recent party conferences. He gave his thoughts, and set about answering the question 'is business the new aid?'

Business has been the hot topic at IDS, and particularly in the Globalisation team in the last year. We have listened to many speakers from NGOs, academia and the private sector giving their thoughts in our business and development seminar series. The next series begins on 25 October, and will focus on business working in conflict areas. Mike Davis, campaigner from Global Witness is the first speaker, and we will also be hearing from Hugh Elliott, Anglo American and Kate Meagher, LSE (among others).

Here are some other stories/events that might be of interest...
If the party conferences are anything to go by, it is clear we can't stop talking about business and nor can anyone else. Please post some comments if you have any thoughts...

Friday, 7 October 2011

Why do we keep talking about business?

By Noshua Watson

You may have noticed that over the last few weeks, months in fact, the recurring topic of this blog has been about the impact of business in international development. Particularly as IDS has now hosted three fringe events at all the recent party conferences, asking ‘is business the new aid?’

IDS Director Lawrence Haddad, argued in his blog post this week that the answer to this question is no.

‘No because businesses creating jobs and tax revenues are much more powerful than aid in reducing poverty and no because unlike businesses, aid has a responsibility to work for the most vulnerable.’

It does depend on what perspective you consider the role of business. From a philanthropic stance, there is a clear space for organisations with the capacity to support governments and civil society through tough economic times in donating aid to developing communities. The issue with such organisations is around regulation, and ensuring that the support is sustainable.

However, as Haddad emphasises, the focus should inherently be on how business can work within a country and create growth. It is about a community being able to support itself out of poverty.

David Cameron’s close out speech at the Conservative Party Conference echoed these thoughts, but he obviously put his attention a bit closer to home.

‘Our businesses need the space to grow - literally. That's one of the reasons we're reforming our planning system. It's hard to blame local people for opposing developments when they get none of the benefits. We're changing that. If a new manufacturing plant is built in your area - your community keeps the business rates. If new homes get built - you keep the council tax.’

Business acts at all levels, be it your corner shop or the Bill and Melinda Gates Foundation. It seems we are all singing to a similar tune, it’s now time to put it into action, home and away.