Merry Christmas – Not!
It’s Christmas week, isn’t it, so obviously lots of governments will be making goodwill gestures to their stressed-out, over-taxed citizens, to show how grateful they are for the tax money that pays for their big, black cars, the trips to G3, G5, G8, G20, G30 junkets in beautiful places with long-legged personal assistants and the rest. Well, let’s see: Mexico is increasing the scope of VAT and has gone back on some promised tax reductions; Max Baucus wants to reduce energy tax incentives (increase taxes, in other words and am I seeing things, or does he have a double who’s going to be the Ambassador to China – that definitely proves that the President has gone off the TPP); community taxes are increasing right across Belgium; and France (that traditional home of Christmas bonhomie) is going to scale back the increases it is planning to the electricity contribution (but not for households), after the politician piloting the latest Finance Bill through parliament admitted that the rises were “brutal.” So, a savage sovereign Bah, Humbug is what we’re going to get. Well, politicians know all about humbug, I suppose.
So let’s keep looking. New Zealand is increasing the tax credits it gives to movie producers, which will help employment in the media, I suppose, although such people aren’t usually the poorest in the community. That’s not the reason for doing it of course: they simply have no choice, given that there is a race to the the bottom going on between a large number of countries and US states to attract “runaway” productions with incentives. Presumably the net result in tax terms is to reduce the amount collected; but it would be too Scrooge-like to point out that the Finance Ministry will therefore have to increase taxes to make up for it, so I won’t. I will point out though that there are now quite a few business sectors in which corporate taxation is yielding to international competition: the media, as we have seen; intellectual property (with Patent Boxes sprouting all over the place like mushrooms); and the shipping/airline sectors, in which some very high percentage of planes and ships benefit from preferential tax regimes. And why? Because they can vote with their engines, and go elsewhere if they are not provided with incentives.