Die Weltsozialforen: Eine andere Welt ist möglich!

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The World Public Finances Initiative at the Bamako Polycentric World Social Forum

In Bamako, we held meetings to initiate the platform for the World Public Finances; a continuation of the of 'Otro Sistema Financeiro' initiative, which consisted of about 15 events at the Porto Alegre World Social Forum (WSF), in 2005. Since then the initiative has taken on a new name, consolidated its mission to establish a more permanent working practice, and opened dialogue with regards to the Nairobi WSF in 2007.

Antonio Martins opened the debate, and laid out some of the aims of the common platform. He said the first goal is to inform each other on the various initiatives, the thinking behind them, and of other proposals. The second goal is to carry out research on what financial markets, monetary systems, and taxation systems are in the current global economy. These issues still need further study, and those findings need to be shared with the widest possible audience. The third goal, and perhaps the most important, is to try to imagine a system of world public finances, and the transformation of many institutions that regulate the global economy. This is something that has a very important political importance because there are, presently, an international system, international space of power, and international institutions, and we in the social movements know exactly which ones are able to influence people's lives, sometimes more deeply than national institutions. But there is no international space of democracy, international space of citizenship, nor international space of redistributing wealth.

Makoma Lekalakala presented the campaign that the Jubilee South Africa is fledging against Barclays Bank, in particular, due to their key role in financing the Apartheid regime. She said that in South Africa, they feel that it is a shame that a decade after liberation their government is still supporting those corporations that aided Apartheid. The Truth and Reconciliation Commission was established with the act of parliament in 1994, and a lot of people went to it, but corporations, international banks and multinational corporations didn't make a submission to the truth and reconciliation commission; therefore, the campaign is asking for reparations.

This campaign may seem to be specific to South African politics, but it should be seen though a much wider sense. First, the continuous role of Barclays and other major banks, like Citibank, is to propel capital flight and aid multinational companies with their tax planning to help them get away with paying fewer taxes to the African people. As these banks become the key middlemen in establishing offshore accounts, companies, and trusts "widely used by corporations to 'neutralise' their own corporate tax burden, and by wealthy Africans to evade taxes to their own government" economic hardship is passed onto the continent.

In a comment made to Makoma Lekalakala's speech, John Christensen from the Tax Justice Network noted how the Riggs Bank in the USA, one of America's most prestigious banks, described General Pinochet in the following way: "a recently retired gentleman who has saved carefully throughout his entire life to retire in an ordered fashion". This is how large banks in the West consider brutal dictators, considering them as respectable wealthy customers interested in the private banking services. Banks welcome dictators' money, and ignore 'know your client' (KYC) requirements. This changes the dynamics of the corruption debate. The focus shifts away from the actors in Africa, to the middlemen (bankers and accountants), and the global structures (offshore trusts, lack of information exchange) that facilitate corruption; this is an important paradigm shift in understanding corruption.

Jasques Nikonoff raised the issue of the air ticket tax, to be implemented in France starting in June, which is rather small when compared to how much airlines are exonerated from the taxation of petroleum products. The exoneration amounts to 3 billion Euros if they were they to pay an equal tax on kerosene as is now paid on other petrol products. The air ticket tax is predicted to raise 200 million Euros in France, so the air ticket tax will not close this tax gap. Internationally such a tax would make over a billion Euros, depending how much global air traffic will be taxed in this manner.

If an effective tax has two different qualities, the air ticket tax, then does not fill neither of them. First, the air ticket tax doesn't fill the objective of regulating financial markets, and second, its redistributive value is limited, especially when compared to the potential of air travel as a tax base in terms of lost taxation. Only by taking a lesson in taxation from James Tobin's proposal on the currency transaction tax, can we keep these two elements together. His proposals had the double effect of both, regulating the market, and raising new revenues for public welfare, including international development. This should be the objective of global taxation initiatives, and more taxes are needed on shares, capital movements in general, derivatives, bonds, and all types of new financial flows. These flows are becoming as diverse as money, attempting to find new ways of escaping social control. Even trade flows become financial flows when trade transactions are mis-priced; hundreds of billions are lost in tax revenue due to this transfer mis-pricing.

From the discussion we then made a list of what world public finances could therefore consist of, and it should be as complete as possible. The list is as follows:

Reparations from multinational corporations, in particular banks that financed the Apartheid regime in South Africa, for human rights violations committed during the Apartheid era
Cancellation of debt for all developing countries
Establishment of an independent debt arbitration panel to avert the possibility of a future debt crisis, and finish the current debt crisis much quicker
Establishing global taxes, particularly on cross-border activities that are currently not taxed, such as kerosene used as airplane fuel, and financial markets of all types
The draft treaty for the currency transaction tax lays out a global tax authority to collect and redistribute; this is proposed as a model for global taxation
Enlarge the definition of money laundering to account for tax evasion as well; the Financial Action Task Force (FATF) of the IMF currently has a very limited view of what accounts for money laundering
Implement a new set of international accounting standards that would show where profits are made, where taxes are paid, and how multinational corporations are structured so that they can be taxed more effectively and regulated under the public scrutiny of both the government and civil society
Tax evasion needs to be tackled as an important topic, both individual and corporate tax evasion
Tax competition needs to link the debates over special treatment of multinational corporations in both developing countries, where they ask for tax holidays before deciding to invest, and in the industrialised countries, where there is a need to halt the race to the bottom of corporate tax rates
Information exchange between tax authorities is required to catch cross-border tax evasion, especially within subsidiaries of multinational corporations and private banking schemes
Progressive taxation needs to be discussed because public finances are being eroded by proposals for flat taxes and single rate taxes on income, for example, or, on the other hand, on taxes like the VAT on consumption, which is regressive, due to the statistical fact that the poor use a proportionally larger amount of their income on basic consumption that falls under the VAT
Public information is required on the economy, in terms of national budgets, especially regarding the activities of companies. Libraries were proposed to take on this political role of keeping the information on the economy for public scrutiny
Issues also need to be linked from the ground level up in order to better coordinate our campaigns, and gain information on the Achievements, and struggles in other countries, cities and communities
There needs to be public scrutiny over the use of public finances, including schemes that are set up for developing countries, such as the HIPC and other grants or lending schemes, that constitute public finances in developing countries.

The platform needs to safeguard the principles of public welfare in the era of globalisation, and make the necessary proposals to revive the ideals of the immediate post-war era. In that era many African ex-colonies gained national liberation, and Pan-Africanism very briefly flourished. If, in the youth studies, there is a theme of the 'lost generation' who grew up in the cynical years of the Cold War and corruption, then there is a new generation of Africans who are rising up to the political and cultural scene. Our task is to reach out to them, and the task of the generation who saw the birth of so many new nations in Africa after colonialism is to share the aspirations they once had, and create new utopias for Africa.

In making these proposals, we need to remember our long-term goal of increasing welfare for all, thus we need to take a rights based approach, which has many advantages since human rights, and the socio-economic rights are a universal language. Therefore, instead of focusing on technical issues, such as, reducing the liquidity of markets, I think we should adopt political utopias that, in any case, will entail a reduction in the liquidity of the foreign exchange market; liquidity itself is a cause for social insecurity.

If we set our goals high, and justify them with the language of human and socio-economic rights, the market will need to accommodate to them, and not the other way around. When the social system has to accommodate the market, we're in a neo-liberal approach, namely market fundamentalism. To counter that, we need global social policy that will regulate markets, making them comply and reconfigure. The mechanisms that are eroding public finances are equally global. Much of the economy exists in this international cross-border space; therefore, we crucially need to tax, regulate, and close the gaps in order to achieve better standards of welfare for all humans, and halt environmental degradation, which is the lifeline of future generations.

I think there could be a big bang effect for global democracy in Nairobi, so I think we should consider making a statement, outlining the thesis for World Public Finances. To do this, we need several months for the documentation process, not just the time during the forum itself. In the eyes of the public, what counts is a movement that can carry a whole generation in Africa, a common statement of purpose would assist in this. Outside of Africa, I believe that the moral and ethical focus on the continent, that took place mostly in Europe, was quite real, though most of the promises were bogus or over hyped. We cannot build on bogus promises, but we can build on ethical sentiments that bridge gaps in understanding and social distance. This means finding innovative ways of linking the North and the South to promote solidarity rather than cynicism. We can do that by adopting a language of universalism; crucial to getting the message out to a wider audiences.

World Public Finances can be a platform with a goal to focus on the strengths of the forum, without playing into its weaknesses. There is no need gather signatures for a declaration, as the platform need not become an organisation. It can be made open, debated about, and people can hold different opinions to what world public finances actually means in their context. The list of issues above shows the diversity of world public finances issues, and we need to be creative with these issues in the same way linking up with libraries as sources of public information demonstrates. A website could collect all these expressions and hold online forums on various sub-themes. Versions of it can be adopted by all interested political parties, trade unions, social movements who find the concept useful in their struggles. We could have a paper expressing a common statement of purpose for world public finances, which then would frame the debate.

If we plan ahead, we can have a well-prepared forum that has both a large space for making statements about world public finances, and a response to satisfy the people who criticise the forum as an endless talk shop. Nairobi will not be a talk shop; in a way it is a test bed for the future of the WSF movement to see how well it will be able to connect the most disenfranchised persons, and inspire new social leaders to carry on with the struggles of this current generation.

[Matti Kohonen is a doctoral student in sociology at the London School of Economics. He is active in the Tax Justice Network and the Association for Taxing the financial Transactions to Aid Citizens (ATTAC).]

See also: Concept Paper for World Public Finances in Nairobi

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