(Policy profile forthcoming)
Governments globally allocate approximately USD 423 billion per year in pre-tax fossil fuel subsidies — resources that flow disproportionately to the wealthiest households: the richest quintile captures 45% of the benefits while the poorest 20% receives only 7%. This expenditure-side misallocation mirrors an equally structural failure on the revenue side: research by the International Tax Observatory finds that high-net-worth individuals pay effective personal tax rates of just 0.3% of their wealth — well below those of middle-income earners — because standard tax systems fail to reach undistributed corporate profits, the primary mechanism through which extreme wealth accumulates while remaining largely invisible to the personal tax base. Redirecting public finance toward universal services, social protection, and the ecological transition therefore requires more than reallocating individual budget lines: it requires treating revenue and spending as a single system, identifying where they work at cross purposes, and realigning them around development objectives.
UNDP’s Fiscal Policy Coherence approach provides this integrated framework. Its Cost of Fiscal Incoherence (COFI) methodology prices the gap between a government’s own legal and policy commitments and what its fiscal decisions actually deliver — across climate, health, social equity, and gender dimensions — producing auditable, GDP-anchored estimates of what incoherence costs and, critically, what ongoing reforms stand to gain. The HNWI taxation agenda, advanced through the Seville Platform for Action to implement the Compromiso de Sevilla, represents the natural complement on the implementation side: where COFI identifies revenue-side incoherence, the Platform provides the tools to correct it — having already trained 109 Colombian government officials on fiscal incidence analysis and progressive tax design, and supported Kenya’s Revenue Authority to build capacity for effective tax rate estimation and HNWI identification. Meeting the SDGs requires precisely this reorientation of the full fiscal architecture: mobilising resources currently captured by regressive subsidies and undertaxed wealth, and channelling them, through integrated revenue and spending reform, toward health, education, green infrastructure, and climate adaptation.
