Recent cuts to France’s development budget starkly contradict French President, Emmanuel Macron’s, ... [+]
Recent cuts to France’s development budget starkly contradict French President, Emmanuel Macron’s, proclaimed commitment to leading on global issues of humanity and the environment. To preserve his credibility and legacy, it is imperative that Macron urgently reverses these decisions.
Last year, Macron led a summit of global leaders in Paris, driving efforts to forge a new financing pact. The mission was crystal clear: "to lay the groundwork for a revitalized international financial system, ensuring that no nation must compromise on poverty reduction, climate action, or biodiversity preservation."
Macron has long been a forceful advocate for funding developing nations and vital global initiatives like environmental conservation. From his rallying cry to "make the planet great again" to his campaign promises ahead of his first election of 2017, Macron has consistently and relentlessly emphasized the urgent need for financial support to the most vulnerable. Backed by unanimous parliamentary support in 2021, France committed by law to increase aid to 0.7% of Gross National Income by 2025, building on Macron's promises to boost French aid to 0.55% of GNI. Additionally, Macron was also the first leader of wealthier nations to commit to reallocate so-called Special Drawing Rights, a type of reserve asset of the IMF, to countries in need. For these measures, Macron was rightly praised by leaders in the Global South and nonprofits alike.
However, Macron’s government recently opted for a €742 million cut in aid, marking France's largest reduction in a decade. What prompted this shift? As a member of the eurozone, France is obliged to adhere to EU fiscal rules, which limit its deficit and debt levels. In February, the government decided on a €10 billion overall cut in the current budget, impacting various sectors such as education, to comply with these regulations. Additionally, the growth outlook in Europe no longer appears as optimistic as it did even a few months ago.
However, this isn’t the full narrative. France leads in utilizing innovative financing to assist poorer nations. The French populace consistently supports aiding poorer and more vulnerable nations, explaining the ongoing effort to complement traditional budget resources with alternative means. France has pioneered contributions to IffIm, a bond system financing vaccinations. President Chirac initiated the airplane ticket levy in 2006, joined by countries globally, primarily funding health initiatives such as combating HIV/AIDS. President Sarkozy prioritized innovative funding sources for development in his G20 agenda in 2011, introducing a financial transaction tax (FTT). President Hollande directed portions of FTT proceeds to development and climate action. This reflects a longstanding tradition across the political spectrum. President Macron, similarly, played a pivotal role in establishing a task force on international taxation, a key outcome of his summit last year. Led by France, Kenya, and Barbados, the task force aims to propose clear tax or levy options for a select group of vanguard countries by COP30.
While championing innovative taxes to bolster scarce developmental and climate resources on the global stage, the French government shows less initiative domestically. France imposes a 0.3% tax on share purchases, with about 25% of the revenue earmarked for development. To not only reverse the recent cuts but also to enhance funding, the government could strengthen the FTT, which currently generates around €2 billion annually.
Three changes could bolster the tax’s effectiveness: First, raising the tax rate to 0.5%, aligning it with the UK’s stamp duty—a tax Margaret Thatcher increased in the 1980s. Second, enhancing tax collection through stricter enforcement could substantially boost revenues. Third, eliminating exemptions for intraday transactions, which currently only tally their net result at day’s end for tax purposes, could further increase proceeds.
Nonprofits call out Macron's recent broken promises on foreign aid
As the world's fourth-largest aid donor in 2022, France wields a substantial budget that significantly impacts vulnerable global populations. Implementing these measures swiftly could generate billions, ensuring France maintains its leadership in creating a more effective and equitable global financial system. Thats why plenty of organizations are urging France to urgently restore its funding commitments. Allez, la France!
