World Bank: Tax Collector

by Nigel Bolton-Shaw on July 9, 2012

New World Bank Chief Willing to Advise Rich Countries … Many development experts argue the bank’s decades of experience working with governments to improve their ability to improve tax collection, social programs, combat corruption and attract investment could help countries like Greece or Portugal that struggle with these issues. -Reuters

This past week, in a little noticed announcement, the new head of the World Bank floated a trial balloon, proposing that the Bank advise troubled developed nations like Greece.

The statement by the World Bank’s new chief Jim Yong Kim would certainly seem to be a significant step and one that might help it evolve into a kind of global tax collector. Here’s an excerpt from a Reuters article entitled “New World Bank Chief Willing to Advise Rich Countries” (see also above excerpt):

While Jim Yong Kim emphasized that his top priority would be to protect developing nations at a “pivotal moment” for a world economy that is losing steam rapidly, he said the bank could also deploy its technical know-how to help richer nations with structural problems. “We only go into countries when asked, but I feel the kind of expertise we have could be relevant in many, many countries in the world, including high-income countries,” the Korean-born American told reporters on his first day on the job. “My staff feel they have the relevant experience that could add value … “

The World Bank has ordinarily restricted its activities to providing aid to developing nations – so Jim Yong Kim’s suggestion breaks ground in several ways. The Reuters article calls this “a major shift for an institution that has focused on the world’s poorest.”

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The World Bank announcement comes just after an important UN report issued this past week entitled “World Economic and Social Survey 2012: In Search of New Development Finance, (WESS 2012).”

The Survey indicated that the UN was having trouble with funding and proposed four taxes to help the UN replenish its coffers. (It also called for the possibility of an expanded role for the International Monetary Funds’ nascent global currency – SDRs or “Special Drawing Rights”). UN globo-crats have long sought direct taxation because such would transform the UN from a talking shop into a true center of formal world government.

Coming as they have, back to back, it is at least feasible that these two trial balloons – the UN’s and the World Bank’s – are connected. A Yahoo article summarized three UN taxing proposals as follows:

• a tax of $25 per tonne on carbon dioxide emissions would raise about $250 billion. It could be collected by national governments, but allocated to international cooperation.

• a tax of 0.005 percent on all currency transactions in the dollar, yen, euro and pound sterling could raise $40 billion a year.

• taking a portion of a proposed European Union tax on financial transactions for international cooperation. The tax is expected to raise more than $70 billion a year.

The  Survey also floated the idea of a billionaire’s tax. But regardless of how tax collection is currently being positioned, it is certainly feasible that over time the World Bank could become a major participant in collecting potential world taxes. The recent Reuters article on the World Bank explains it this way:

By charging for its advice, the World Bank would boost its own revenues at a time lending returns are set to decline as more borrowers gain access to capital markets. Big bank shareholders, like the United States, are also cutting budgets and would be hard pressed to persuade their legislatures to pony up more money for the World Bank … The idea already has been informally debated among the bank’s shareholders. “I would encourage the bank to do it as long as it does not involve resources that are meant to go to developing countries,” said one World Bank board official from a large developing country.

The World Bank is stepping up other activities. In the year following the debut of the financial crisis (2008), the Bank lent a record $100 billion to borrowers. Despite this, new leader Kim characterized the World Bank’s financial position as “very strong” and according to Reuters reemphasized the institution’s willingness to lend to “middle income” countries.

Those who disapprove of the World Bank’s activity will surely not welcome the Bank’s increased activism. Thanks to ‘Net dissemination of information about the World Bank, its institutional conspiracy with the International Monetary Fund (IMF) is well known. Throughout the 20th century the World Bank pursued a policy of lending to bankrupt developing countries – almost inevitably making matters worse rather than better.

The funds would be lent to the corrupt central government despite the institutional understanding that those receiving the funds would probably divert them. Once the government of a given country had dissipated the funds and signaled that it could not pay them back, the IMF would be called in to provide prudential restructuring.

The restructuring usually included higher taxes, reduced benefits and privatization – the sale of national resources to Western multinationals. Within this context, the World Bank could be seen metaphorically as part of a ”tag-team” with the IMF. One placed an impoverished country in hoc and the other cleaned it out.

The idea that World Bank may now want to collect taxes on behalf of the UN – and inevitably the IMF – must surely be perceived as unwelcome by anyone who disapproves of globalization and its increasingly brutal implementation.

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