Additional Titles








Does The
Global Economy Need a Global Currency?






By Joan Veon
August 20, 2003

The first mention of global taxation is in the book of Luke in the New Testament when Caesar Augustus decreed that "all the world should be taxed." The only other recognizable world empire since Rome which spans the world is the United Nations birthed in 1945. What we are seeing currently is the move toward global taxation and tax harmonization between the nation-states.

Part I - Global Taxation

I started to follow the concept of global taxation when I read a magazine put out by Bella Abzug's group, Women's Environment and Development Organization-WEDO, that said the idea of global taxation was going to be part of the discussions at the 1995 Social Summit in Copenhagen. Concurrently, the 1994 Human Development Report published by the United Nations Development Program-UNDP, called for a number of global taxes: pollution tax of $1 per barrel of oil consumed, a tax of 0.005% of 1% on the value of each international currency transaction (referred to as the Tobin Tax--today over $1.9T runs around the world on a daily basis looking for the highest return and quickest play) and restructuring aid to poor countries by increasing Official Development Assistance-ODA to 0.7% of Gross National Product. At that time, if all of these various schemes were approved, they would have provided the UN with an annual income of $250B compared to the $10B they spent in 1993!

In 2000 at the UN Millennium Summit, the kings, princes, presidents and prime ministers of this world affirmed the need for the United Nations to: reduce by 50% the number of people living on less than $1 a day and the number of people who suffer from hunger; ensure that all boys and girls in the world complete primary education, reduce the mortality rate among children under five by 66%, halt and reverse the spread of HIV/AIDS as well as malaria and other major diseases, integrate the principles of sustainable development into country policies and reverse the loss of environmental resources, reduce by half the number of people without access to clean drinking water and improve the lives of 100 million slum dwellers by 2020. In order to pay of all of these new goals, a form of perpetual income is needed by the United Nations. While all of these goals transcend the constitutional responsibilities of national governments, the UN needs to have some kind of global taxation in order to pay for these new and added responsibilities.

At the Financing for Development Conference held in March 2002 in Monterrey Mexico, the presidents and prime ministers of many countries met to discuss how to meet these goals. Secretary-General Kofi Annan opened the conference by saying, "You, ladies and gentlemen, are the leaders to whom the world's peoples have entrusted their destiny. Your peoples look to you for a common effort to solve their problems." Instead of respective national congresses and parliaments directing their president or prime minister, here was an international "civil servant" directing them! Do you see the switching of power and position that is taking place?

For a number of years, the UN has been calling for an increase in Overseas Development Assistance. Begun in the 1970s, the developed countries agreed to set aside a percentage of tax revenues to give to other countries by way of aid. The top three countries that receive most of our ODA are Russia ($1.154B) Israel (almost $1B) and Egypt ($799M). In preparation for the Financing for Development Conference, President Bush announced in March 2002, a 50% increase or $5B in the amount of ODA so that by 2006 it will increase to $15B (in comparison, New York faces a $3.5B budget shortfall and California has a $30B deficit). The $5B will go into a "Millennium Challenge Account" intended to support initiatives to improve the economy and standards of living in developing countries whose leaders have agreed that they have to measure up to the aid by making changes to their laws and in the structure of their government.

Since 1995 the United Nations has floated the idea of a global tax called "The Tobin Tax" which has been named after its originator. This scheme would tax all the money which flows around the world on a daily basis looking for the highest return. While the Tobin Tax has been considered too complicated to administer and set up, at Monterrey two British groups, War on Want and The New Economics Foundation, held a workshop where they put forth a legal framework for how the tax could be implemented on a global level. They also proposed a "Global Development Commission" which would basically act as an international treasury.

While the final document did not specifically advocate the "Tobin Tax", the final document or "Monterrey Consensus" reported the recommendations from a number of "Roundtables" that were comprised of business leaders, NGOs, churches and country leaders. Several key roundtables which included the United States, the Holy See, United Kingdom, World Economic Forum, the IMF, World Bank, Zurich Group and others all called for: "an international taxation organization should be created to tackle issues of international coordination of tax policies, environmental taxes and taxes on currency transactions, taxation on carbon emissions and a new allocation of special drawing rights".

Part II - Tax Harmonization

With regard to tax harmonization, there are concerted efforts at this point in time for countries to harmonize their tax policies. Interestingly enough the Bush tax proposal has at its centerpiece the elimination of double taxation of dividends which for the past 30 years, has been a key topic at the United Nations. Furthermore, the Bush tax plan will change our ENTIRE TAX CODE from a tax on income to a value added tax or flat tax on purchases. Let's examine both of these.

First, the United Nations started working on a Model Double Taxation Convention as early as 1968 with a final convention finalized in 2001 with the purpose of reducing the complexity and to facilitate trade and investment between countries. In the past, it was recognized that a worldwide multilateral tax agreement would not be feasible but a treaty signed by two countries would be.

According to a recent article in the Financial Times, the US and the UK signed a treaty the end of March to eliminate withholding tax on dividends paid by a subsidiary to its US or UK-based parent. It also co-ordinates the tax treatment of US and British pension plans in the two countries as the US will not be withholding taxes on British pension funds' dividend earnings in the US. I believe in time, there will be no taxation between countries as this is part and parcel of complete tax harmonization between the nation-states, investors and corporations.

Furthermore, the proposed Bush tax plan is part and parcel of harmonizing our tax codes with other countries. Among OECD countries, the US has a sales tax of 7% with the average consumption tax in Europe at 17.2%. We have, however, the highest personal income tax of almost 40% while the EU average is almost 24%. Under a VAT, the highest tax bracket will be reduced by at least 19% while the worker class which pays no tax will be increased to 21%.

I have to agree that the flat tax mechanism will simplify taxation, however, we have to understand that since 1981 a dozen major tax laws were passed. The number of changes (laws) made to the Internal Revenue Code total over 100. Is it possible that the laws were changed so in order to then put forth a system of simplification? However, we should understand something far more serious, a flat tax is feudalistic as it will increase the cost of living substantially by taxing every purchase and take away all of the current deductions that Americans enjoy.

A flat tax will be just that-it will take away all of our deductions and expose every purchase to taxation, with the exception of food. The percentage taxed can then be raised according to the amount of income the government needs to pay its debts. By the way, our government has borrowed $5T from Social Security and $13T from Medicare. On top of that, we now have the Iraqi War to pay for. On top of that, a major change in tax laws will add to our deficits as a result of the elimination of the double taxation which is at the very heart of tax harmonization.

Lastly, according to VAT expert, Alan Tait of the IMF, "the rise of the VAT is an unparalleled tax phenomenon. The history of taxation reveals no other tax that has swept the world in some thirty years. It is no longer a tax associated solely with the European Community. Every continent now uses the VAT." All of this will eventually lead to a global taxing authority.

� 2003 Joan Veon - All Rights Reserved

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Joan Veon is a freelance international reporter and a businesswoman. She Is Executive Director of The Women's International Media Group, Inc. Her website is For an information packet, please call 301-371-0541









"In order to pay of all of these new goals, a form of perpetual income is needed by the United Nations. While all of these goals transcend the constitutional responsibilities of national governments, the UN needs to have some kind of global taxation in order to pay for these new and added responsibilities."