As the financial transaction tax (FTT) becomes part of the European political landscape and moves its way through EU member-state legislatures, the use of a percentage of tax revenues for development – and specifically for basic global education needs— remains highly uncertain.
The 11 eurozone countries that got the green light from EU finance ministers in January to move forward with a coordinated tax on financial transactions could deliver as much as €35 billion for their national budgets. But the clear consensus shared by these 11 nations— which collectively represent two-thirds of the EU’s economy— on the timeliness and necessity of implementing such a tax now is not equally matched by a consensus on allocating part of the revenues to international development, let alone education. This is an unfortunate state of things given that the idea of using part of the revenues to support global development was a big reason for the huge social movement in support of the tax.
The backdrop to this uncertainty is the austerity agenda being pursued by many governments, in which foreign aid budgets are under pressure. As a consequence, foreign aid to global education risks falling faster than overall aid levels.
To date, only one of the vanguard countries in the FTT movement, France, passed its own FTT in mid 2012 and committed to allocate part of the revenues to development and climate finance. At the time, many called for 50 percent of FTT revenues to be dedicated to overseas development assistance and climate finance, but that figure soon dwindled to 10 percent, and ultimately 4 percent, for health and environmental projects. The ray of hope is that France has expressed its willingness for the EU FTT to also be partly allocated to development and climate finance, and is currently gathering support.
Civil society groups in France and in Europe generally are more effectively mobilized within the health and environment sectors, and are comparatively weaker on the education front. Yet given that global education is a sine qua non for successful economic development, it’s vitally important that global education activists in France and elsewhere not only mobilize within their countries to earmark revenues for development– including basic education— but also collaborate across the larger European landscape to set a precedent for the use of financial transactions taxes around the world. An EU financial transaction tax for development could indeed put more kids in school and improve their learning outcomes in developing countries.
The European Union, via its member states and the European Commission, is among the largest donors to global education in the world. But the recent OECD Development Assistance Committee data release revealed a decrease in official development assistance for the second year in the row with significant cuts in countries like Spain and the Netherlands. And an agreement among EU heads of state at the February 8 European Council for the 2014-2020 EU budget is not going to fill this gap. In fact, the budget froze the portion earmarked for development at 2007-2013 levels, leaving the EU far from its commitments to reach 0.7 percent ODA/GNI by 2015.
Another worrying fact is that global education may not be a priority sector for the EU in many countries moving forward according to early word from several developing countries partners.
For low-income countries that simply cannot grow and improve their basic education systems without external financing, a decrease in aid flows without a compensating or greater infusion from innovative financing such as the financial transactions taxes, spells disaster. That is why, in addition to pushing donors to respect their commitment in developing countries to aid, the education community should do all it can to ensure that newly enacted financial transaction taxes allocate part of their revenues to global education.
If these examples are indicative of the way financing for global education has worked to date, they amply underscore the patchwork approach that even pieced together will still leave students in developing countries falling behind.
For the first time, a major economy is saying: We will be better off doing things by ourselves, and making our own decisions. And that's a bit of a shock to the system.