Taxing Rich Nations Will Lessen Global Poverty Gap Says Malaysia Leader

Mary Swire, Tax-News.com, Hong Kong

01 March 2001

Malaysia's Prime Minister, Mahathir Mohamad, has called for taxes to be levied on wealthy nations as the only effective way of reducing what he says is the constantly widening economic gap between rich and poor countries.

Speaking at a conference in China, earlier this week, Mahathir said rich countries who force developing countries to open up their markets should pay in return. He said: 'A globalised world, actually a world nation, should not let the rich exploit the opening up of the borders of the countries without exacting payment.'

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. 'A world nation would be meaningless if the rich can make more money but are exempted from taxes,' he argued. He also explained that his plan would also be of advantage to the wealthier countries because 'only they have the know-how, the machines and the trained experts to carry out the projects. They will therefore get back a good portion of the money they paid for the world infrastructure tax.'

Mahathir's proposal echoes that of India's Prime Minister, Atal Behari Vajpayee, who said last month: 'It is high time we considered the imposition of an international levy on capital flows between developed countries, and all capital repatriations from developing countries.' Vajpayee also thinks that globalisation, while beneficial in many ways, has had a hand in extending the poverty gap and 'as a result,' he says 'the rate at which poverty is being eradicated has not kept pace with the rate at which the rich are getting richer.'

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. He said he expected the West to cast a doubting shadow over his request but it will still 'insist that poor countries should open up their economies for them to exploit.'

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