ITTF work plan on climate change financing endorsed by members in US

PHILLIP ISAKPA, STOCKPORT, UK 

• Set to push tax options at COP30 in 2025

• $2.4trn funding gap exists

• Invites nations, experts, stakeholders to join effort

• Colombia joins as new member at meeting 

A two-year work plan for the International Tax Task Force to come up with measures to raise additional finance for equitable climate and development action has received the endorsement of member countries at a meeting held in Washington DC, United States, last Wednesday.

It is estimated that a $2.4 trillion funding gap currently by 2030 exists annually for developing and vulnerable countries to meet their Paris Climate Agreement and commitments, and the ITTF, set up at the United Nations  COP28 in Dubai, United Arab Emirates (UAE), is aiming to bring governments together to foster the political will and advance options for international climate taxes to significantly close this gap.

Member countries of the task force are also aiming to ensure that, with respect to the taxes that will emerge, all industries and people contribute to financing the fight against climate change, taking into account the pollution induced by their activities.

Following the endorsement of the 2-year work plan, members now target putting forward proposals and to promote international agreements on one or several tax options at COP30 in autumn 2025, a statement made available to Business a.m. at the end of the meeting stated.

According to the statement issued by the secretariat of the ITTF, which is being hosted at the European Climate Foundation (ECF), it is hoped that “these agreements can be implemented by relevant decision-makers, and by coalitions of countries ready to commit to implementing new tax options at domestic level or in a relevant international forum, to generate more fairness and equity in the current global tax system.”

The Washington meeting, the first official meeting of the task force, coincided with the International Monetary Fund (IMF) and World Bank Group’s Spring Meetings in the US capital, and had in attendance the founding members – Kenya, France, Barbados, Ireland, Spain, Antigua and the Marshall Islands – who were joined by a new member, Colombia.

Business a.m. has been told that the European Union, the International Monetary Fund (IMF) and the United Nations attended in observer capacity. With representations currently spread around the world, members are still calling on other interested countries to join the new initiative which is being chaired by Kenya, Barbados and France.

Commenting, Laurence Tubiana, a professor and the chief executive officer of the European Climate Foundation and the architect of the Paris Climate Agreement and also co-lead of the Secretariat of the International Tax Task Force, said:

“Finding new ways to raise the billions needed to fight climate change effectively and equitably is a huge, but necessary task. Building on and complementing the important work done by bodies including the UN and the OECD, our task force will be looking for workable solutions for governments across the world. We’re inviting nations across the world, as well as stakeholders and experts, to engage with and input into our research, and we also expect to shortly announce my fellow co-lead of the task force’s secretariat.”

The ITTF was launched at COP28 but in the aftermath of discussions at the Paris Summit for a New Financing Pact and Africa Climate Summit 2023 targeted at addressing the Paris Agreement climate action and development financing needs, ideas have been crystallising around new climate levies on private air travel, financial transactions, maritime fuel, carbon damages, fossil fuel profits and reinvesting fossil fuel subsidies to provide significant additional revenue and make the financial system fairer and more equitable.

It noted that the initiative comes in the wake of emerging discussions among the international community highlighting “the importance of putting tax cooperation at the service of global public goods and development objectives,” and adds that “it echoes calls from supporters of the Paris Pact for People and the Planet (4P), the Bridgetown Initiative and the Nairobi Declaration on Climate Change to leverage additional financing for these objectives.”

According to the statement from the secretariat, the first meeting kickstarts a year and half of research and public consultations, with final recommended actions to be delivered at COP30 in November 2025. 

“The task force is keen to find practical solutions that raise much needed financing to tackle climate change while having minimal impact on ordinary people. The goal is to develop innovative sources of financing that can be implemented by any country that wants to make a difference, ” said Ali Mohamed, Climate Change envoy for Kenya and Sherpa to the task force.

Also commenting, Aurelien Lechevallier, director general for globalisation at the French Ministry for European and Foreign Affairs and Sherpa to the task force, said:

“The need for substantial, sustainable financial resources for countries to tackle climate change has never been more urgent. As a coalition of nations seeking ways to ensure we can meet our climate and development commitments now and into the future, the task force will collaborate to build political will among all governments and bring equitable, evidenced and workable solutions to COP30.”

Arnold McIntyre, principal technical advisor for the government of Barbados and Sherpa to the task force, said:

“The new avenues of taxation that we will be exploring in the task force can be a powerful lever that, alongside traditional financing from governments, international financial institutions and the private sector, will unlock the necessary resources for climate adaptation and mitigation. Together we will be developing equitable proposals to apply levies targeting the most polluting sectors and individuals, with the aim of supporting the most climate vulnerable people and countries who have contributed least to rising global greenhouse gas emissions. We look forward to meeting our fellow Heads of State and Government of the International Tax Task Force in the margins of the UN General Assembly to take stock of our collective progress.”

The secretariat noted that the task force will consider design options for each levy by taking a stocktake of existing levies already implemented in countries and conducting a literature review, adding that this will be ahead of launching impact studies in the summer to consider each levy’s potential based on criteria such as: revenue collection and distribution; national and international equity; economic and environmental impact; potential scale; political feasibility.

It explained that the findings of these studies will include feasible and sensible options for international climate taxes that can easily be implemented, and adds that the first stocktake of this research will come in autumn 2024.

The permutations already made by way of estimates suggest that each tax avenue under consideration could raise between $4 billion and $1 trillion annually for climate mitigation and adaptation through tactical interventions on major polluting sectors and individuals, the secretariat noted.

At COP28, Presidents William Ruto of Kenya, Emmanuel Macron of France, and Prime Minister Mia Mottley moved to establish the International Tax Task Force guided by the aim of mobilising finance at scale while bringing more equitable climate justice and fairness to our current financial system. 

It has received the highest possible level of endorsement from the founding heads of state and government with a mandate that builds on the outcome of the Global Stocktake, and complements other initiatives and complements such as the soon to be finalised G20-OECD’s inclusive framework for the two-pillar global tax reform and the call for a UN Tax Convention. 

The secretariat explained that the work of the ITTF will include at least one meeting at head of state and government level ahead of COP30, and representation at international summits, including COP29 in Baku, Azerbaijan, and the UN General Assembly in New York.