Malaysian PM Steps Up Calls For World Tax To Help Poor Countries

by Mary Swire, Tax-News.com, Hong Kong

22 August 2001

For some time now Malaysian Prime Minister, Mahathir Mohamad, has taken every opportunity to call for a 'world tax' levied on rich nations which he sees as the only effective way of reducing the constantly widening economic gap between rich and poor countries.

But now Mahathir is using a different tack by suggesting that poor countries will come to the negotiating table with the WTO to discuss free trade and economic liberalisation if the tax is implemented. Many developing countries are currently refusing to participate in a new round of WTO talks unless rich countries remove subsidies and other measures that make it difficult for them to compete in the global markets.

At a conference of African leaders held in the Ugandan capital of Kampala this week, Mahathir proposed that the world tax would assist developing countries in improving their infrastructure as well as promoting the liberalisation of the global economy. He said: 'The rich will not take note of these proposals. But if they want the poor to come on board the WTO and globalisation they should make wealth sharing quite certain by agreeing to this world tax. It is only fair that these countries pay statutory taxes to the world because they are considerably enriched by the world.'

In Mahathir's view multinational agencies such as the IMF and the World Bank have failed to help effectively the world's poorer nations and insists that an international development programme to fight global poverty that is supported by rich countries' taxes is the answer.

As the longest-serving leader in Asia at 19 years in office, Mahathir is well known for his criticism of the developed nations' obsession with globalisation and their belief in curing the ills of third world countries with 'western-style' solutions. In the Asian tiger economic crisis of 1997-98, Mahathir achieved international acclaim when he refused IMF guidelines and successfully brought Malayasia out of recession with his own economic policies.

In desperate attempts to attract foreign investment, developing countries often give multinational companies favourable tax reductions and exemptions. As a result, argued Mahathir, multinationals paid most of their tax to their home governments and the governments of the developing countries receive a pittance, if any money at all. 'It is only fair and logical that businesses operating throughout the world should pay taxes to the world,' he said.

Mahathir said that his government would be prepared to pay the world tax adding that the 'the already-rich would get richer, but the poor would get a little of the wealth and meet the infrastructural needs of their countries.'

Recommended