15 September 2005

De Villepin airline tax proposal a modest step towards development funding gap

French Prime Minister Dominique de Villepin will today announce a new airline tax to fund poverty reduction, to be agreed by the end of 2006. The proposal is supported by the quadripartite group of countries, which includes Germany and Brazil.

The UK government has indicated that it may support the proposal, and a larger group of countries is expected to sign up to a Declaration on 'innovative sources of financing' initiated by President Lula.

The proposal, which European Finance Ministers have indicated could raise between €550m and €2.7bn a year to support development efforts in the world’s poorest countries, has been given a cautious welcome by development campaign group ActionAid.

"Current aid levels are grossly inadequate to the scale of the development challenge," says Louise Hilditch, ActionAid policy director. "So any new money is welcome. However, the current airline tax proposal makes only a small dent in unmet financing needs. We are also concerned that it could distract attention from the urgent need for all donor countries to reach the aid target of 0.7% by 2010 at the latest – some forty years after it was first agreed. Had these promises been kept, there would be much less need for a discussion about an airline tax."

"An international tax for development has the potential to make aid more predictable, and provide stable funding over the long term to achieve the Millennium Development Goals," says Patrick Watt, ActionAid Senior Policy Officer. "However, the current proposal provides no more than 5% of the estimated financing needs for achieving the goals."