Press releases, 20.8.2012

Hautala at the Annual Meeting of Heads of Missions: savings in appropriations also have a price tag

Press release 183/2012
20 August 2012

Minister for International Development Heidi Hautala warns against downplaying Finland’s international commitment to raising the level of development cooperation appropriations to 0.7 of GDI. The delay manifests itself, for example, as slow progress in international negotiations, said Hautala, who was one of the speakers at the Ministry for Foreign Affairs’ Annual Meeting of Heads of Missions.

Hautala pointed out that the Government has already on three occasions promised to channel income from auction revenues obtained from the EU Emission Trading System (ETS) to development cooperation.

“Fulfilling this promise will soon become topical. It will give Finland a chance to close some of the gap the freezing of development cooperation appropriations at the present level will leave in 2013–14.”

Hautala estimates that a consistent progress towards 0.7-per cent level of GDI by 2015 would require annual revenues amounting to some 135–455 million euro from emission allowance auction.

The Minister for International Development underscored that, alongside official development cooperation, it is important to pay attention to other money flows for development. If developing countries were given the revenues from their own natural resources to their own use, in case of several countries this would exceed development aid multiple times. Illegal capital flight, of which developing countries in particular suffer, constitutes a major problem.

“Illegal and unregulated flight of capital is a problem for industrialised countries as well, although on a quite different scale. Finland loses an estimated 300 million euro due to transfer pricing by companies, whereas the developing countries lose as much as 300 billion annually.”

Hautala highlighted one potential source of revenue: the financial transaction tax (FTT), mentioned even in the government programme. According to an opinion poll, two thirds of Finns support introduction of the FTT proposed by the EU Commission.

“At the moment, practically no taxes are imposed on the financial market. It is hoped that Finland would take a responsible role in the Leading Group, established by France, that examines innovative development financing mechanisms. This is hardly possible, if Finland does not stand among the EU States in the vanguard of development of a financial market tax.”

Additional information: Milma Kettunen, Press Attaché to the Minister for International Development, tel. +358 40 522 9869, [email protected]