There is a welcome announcement that an international pro-FTZ organization will set itself up in low-tax Dubai. As any regular reader of this column will know, Free Trade Zones (or their equivalents) are a Good Thing, while governments that exclude or limit them are a Bad Thing. It’s not immediately clear whether the new organization has support from the great and good of the world economic order, or whether it has any kind of reasonable financial footing; but it is welcome nonetheless, and Dubai, which is already home to a large collection of free trade zones, gets a large bouquet for supporting it. At the risk of becoming boring (just move on) let me rehearse some of the reasons why most governments dislike and discourage free trade zones, if they don’t ban them outright like the dinosaur European Union. We … Read More »
A re-run of the classic tax western is taking place in the Philippines, in which the bad guys want to raise taxes in all directions while the good guy (Ronald Reagan?) believes that reducing tax rates will result in more tax being paid. The part of the Gipper is being played by Juan Edgardo “Sonny” Angara, who wants to cut the country’s 30 percent corporate tax rate (the highest in South-East Asia), while tax professionals gasp with horror, needless to say. Well, how’s about some facts? In April, the Philippines Department of Finance disclosed a 26 percent rise in collections of import duties, taxes and fees in the first quarter of the year. In money terms that’s equivalent to USD500m (USD2bn annualized), while our hero predicts a loss of just USD160m in corporate tax receipts in the first year of … Read More »
It would be a brave girl who asserted that she understood the economic situation of Egypt, except to say that it is dire; but it seems a reasonable proposition that the IMF (from which the government is hoping to borrow USD15bn or some such number) was behind this week’s five percent increase in the top rate of tax. Individual well-off Egyptians are round about 99 times cleverer than any government they have had in the past 50 years or are ever likely to have, so this has to be regarded as a piece of window-dressing. But other IMF prescriptions this week also follow the usual tax-increasing path: in Luxembourg it’s VAT and property taxes; in Lithuania it’s property taxes and vehicles; in Latvia it’s the flat tax thresholds. And here is a particularly abysmal example of first world high-taxing double-speak … Read More »
There is a tale of two countries Down Under this week, with both New Zealand and Australia launching their annual budgets. Both have right-wing governments, but whereas New Zealand is reaping the harvest of four years of sensible, low-key, pro-business taxation policies, turning in annual surpluses as far as the eye can see, Australia’s equally pro-business government is left with the bitter stubble of seven years of left-wing Labor rule, and is forced into a tax-raising budget to try to repair some of the damage done to the economy by Labor’s spendthrift policies. The Australian Labor Party did occasionally make gestures in the direction of business, but that’s all they were – virtually every substantive measure taken by the last government was either populist or overtly negative for the economy.
One other important difference between the twin countries, one much bigger … Read More »
It seems repetitive to keep on congratulating Hong Kong for sticking to its last, and once again insisting that it will not increase taxes; but to do so against all the pressures for more spending that exist in every State implies a very clear commitment to small government and low taxation. Like Singapore, Hong Kong insists that it will not step onto the primrose path of popular appeasement. There are to be no bread and circuses! In limiting itself to a maximum level of public spending of 20 percent, the administration sets its face against increased debt as much as against increased taxes. For comparison, Denmark spends 67 percent of GDP, and even the USA, which is far from the top of the table, spends 43 percent of GDP, according to OECD figures. And it’s not true that Hong Kong … Read More »
It has been a good week, on the whole, for trade, with ABAC urging APEC to progress FTAAP through amalgamation of ASEAN, the TPP and RCEP via the Bogor goals. Sorry, I couldn’t resist that. The bottom line is that most Asia-Pacific nations are very well disposed towards free trade deals. And the GCC (Gulf Cooperation Council) which has been demonstrating the opposite of cooperation by walking through trade treacle on its way to a regional tariff-free zone for the last ten years, is finally showing some signs of movement towards its goal. The GCC consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, so we can award stars to Dubai at least (confused? don’t be, it’s part of the UAE and a lot more market-friendly than most of the rest of it), although the remainder … Read More »
One thing the USA is probably not going to do, unlike many other countries world-wide, and even next-door companion-in-arms, Canada, is to sell citizenship. It is a popular sport nowadays, although many people find something unseemly in the spectacle of white-gloved butlers ushering the rich into a national club by the front door while the great unwashed try to scale the walls at the back of the house, to be beaten back very often, sometime physically, or even shot. These people will not like the fact that the UK is dining out on tax receipts from so-called “non-doms,” while deporting refugees and denying social benefits to legitimate immigrants from recent EU entrant countries. In fact there are dozens of countries with active programs to encourage incoming rich individuals: a recent report claims that the average incoming “citizenship” investor has net … Read More »
So the European Court of Justice, supposedly the guardian of the sacred freedoms of the European Union, has chickened out of one of most important issues currently confronting the EU, at exactly the moment when it should have taken centre stage and erected or reaffirmed some principles for the Union to follow.
In recusing itself from any involvement in the structural legislative processes of the Union over the question of the Financial Transactions Tax, the Court has diminished itself and the Union, sending a message that administrative convenience is a more important principle than judicial rectitude. It will be many a long day before it recovers from this piece of egregious cowardice, if it ever does.
There are multiple theories to explain the court’s behaviour (I hereby deprive it of its capital letter – it no longer deserves it), but the most … Read More »
The IRS, which like most tax authorities is subject to a regime of democratic accountability only indirectly, has not had a good week, after it was accused by the Treasury Inspector General for Tax Administration of paying bonuses to tax-deliquent employees, and told by the United States Government Accountability Office that it needs to sharpen up still further even after having had to deal with a series of past budget cuts. The GAO also criticized the IRS for failing to audit a sufficient number of large partnerships, a relatively new phenomenon in the investment sphere. Nobody much loves tax collectors, but you have to have a degree of sympathy with the IRS, which has become a victim of internecine political rivalry on the Hill, as sequestration and a series of unimplemented budgets have left it with yesterday’s level of resources … Read More »