EU Approves Financial Transaction Tax–Will Global Health Benefit?

Some big news out of Strasbourg today.  The European Union Executive Board approved a “Financial Transaction Tax” proposal that would impose a 0.1% levy on all stocks and bonds traded within the 17 member EU bloc. Some $57 billion could be raised every year, which the EU hopes would lower countries dues memberships and also provide a much needed cash infusion to the struggling EU system.

Activists have long sought a financial transactions tax the proceeds of which would support international development.  For several years, this has been the cause championed Philippe Douste-Blazy, the former French foreign minister who runs a UN affiliated “laboratory” for innovative financing for development known as UNITAID.

Since 2006, UNITAID  has raised nearly $2 billion from a small levy on airplane tickets (like one or two euros per ticket) in and out of about a dozen participating countries.  With those funds, UNITAID has been able to create new markets for drugs;  bring down the cost of AIDS, TB, and Malaria medicines;  and most recently, introduce a new patent pool into which pharmaceutical companies can turn over their patents to generic manufacturers for the cheap distribution of expensive drugs in the developing world.

This move on the Financial Transaction Tax comes at an important time. The last few years has seen some incredible progress on global health.  About 6.6 million people were receiving anti-retroviral therapy in developing countries at the end of 2010 — a nearly 22-fold increase since 2001; for the first time since its discovery 30 years ago, HIV/AIDS is on the retreat worldwide. New medical innovations in HIV prevention promise to sharply cut infection rates — at least between heterosexuals. For the first since the AIDS virus was discovered 30 years ago, serious activists are actually contemplating the end of AIDS.

Malaria infection rates and deaths have also sharply declined in recent years.  Thanks to investments in childhood vaccines, over 80% of children around the world are protected from Measles. Polio is on the verge of eradication.

The thing is, these successes are coming at a time when funding for global health and development is flat lining for the first time in a decade. The global financial crisis has forced traditional donor governments to decrease their foreign aid. This is happening pretty much across the board in OECD countries. The resources that have enabled these amazing successes are starting to run dry. Global AIDS funding alone dropped by 10% in 2010.

If the progress we have seen in recent years is to be sustained, we need to look for  ways to fund global health that do not rely exclusively on the generosity of donor governments. This is where programs like UNITAID and funding sources like a micro-tax on some financial transactions come in.

If a group like UNITAID or the Global Fund can administer just a small sliver of that $57 billion pie, the fight against global diseases can not only hold its ground–but prevail.