To receive
monthly updates on new features in lowtax.net
and tax-news.com just enter your e-mail address
below:
Daily
Tax Quote
New On The Lowtax Network Today
This feed is published daily with selected new or updated
content from across the Lowtax Network. For a list of Lowtax Network
sites, many of which feature daily news, see
below.
Providing essential tax news and information
for globally mobile artists, contractors, entrepreneurs, professionals,
small businesses, sportspersons and entertainers.
Lowtax Portal:
'Low-tax' business and investment in the top 50 jurisdictions covered in
exceptional detail.
Tax News: Global
tax news, continuously updated through the day.
Investors Offshore:
The independent offshore and alternative investment guide for expatriates
and the globally aware investor.
Law & Tax
News: Daily news and background data on tax and legal developments
for international business.
Offshore-e-com:
A topical guide to offshore e-commerce focused on tax and regulation.
Lowtax Library:
One of the web's largest and most authoritative business and investment
information sources.
US Tax Network:
The resource for free online US taxation information, covering: corporate
tax, individual tax, international tax, expatriates, sales and e-commerce
tax, investment tax.
NEW! Personal
Business Tax Guide: Providing essential tax news and information
on business for contractors, entrepreneurs, professionals, small businesses,
artists, sportspersons and entertainers.
Lowtax
Network Hosted Blogs
19 April 2009
A Penny For Your Thoughts The Pirate Bay judgement in Sweden last week, in which the four leaders of
the download facilitation site were sentenced to one year in prison and ordered
to pay SEK30mn (USD3.56mn) in damages (they have appealed), is a victory for
the established music distribution industry, but it is just one skirmish in
a long-term war which the old-style providers cannot win. A much more significant
event during the week was the French National Assembly's rejection, against
the wishes of the government, of the 'three strikes and you're out' law which
would have required ISPs to switch off persistent download offenders. Just as
French parliamentarians refused to bow to the authoritarian agenda of the old
guard, so in New Zealand recently a popular outcry stopped the government from
bringing in a similar law.
It was time that the received wisdom of the sanctity of 'the rights of copyright
holders' received a jolt. In recent years, legislators around the world have
been gaily extending copyright periods, introducing 'droits d'auteur', slapping
fees (taxes) on the re-sale of art works and so on. These rules are anti-democratic
and anti-cultural, on a level with book-burning, and are testament to nothing
other than the lobbying power of the established publishing and distribution
industries.
Copyright and royalty laws and structures are mostly of very modern provenance,
and are a direct result and reflection of the particular distribution systems
that have grown up. Although the Romans issued copyright-style privileges to
booksellers, copyright in the written word didn't really have much of an impact
until well after the invention of printing, and composers didn't start getting
royalties until the mid-19th century. Recent as they are, however, it is absurd
to try to translate these out-dated concepts into the new world of Internet
distribution.
That is not to deny the rights of originators, and even to some extent distributors,
to be rewarded for their labours; it is just to say that the current model is
dead, and needs to be thrown out, lock, stock and barrel.
As in so many other spheres of economic activity, the Internet is disintermediating
the middle-men, giving the end-consumer direct ways of accessing and enjoying
the words and music she wants. That much is obvious: what is missing, or at
least unclear, is the mechanism by which a market discovery mechanism can be
set up through which consumers can reward originators. And originators themselves
will find that the destruction of the old models of content marketing will be
creative for them. There are substantial barriers to entry in many branches
of publishing, as anyone knows who has tried to find a publisher for a book,
or a recording company for a new group.
In the last analysis, words (literature), the graphic arts and music are types
of entertainment, and the Internet will enable direct delivery of a far greater
range of types of entertainment to users. Already in the first decade of the
21st century entertainment and sport are perceptibly merging into one another,
and this process will continue at a rapid pace during the decades to come, as
the world gets richer, and elective activities gradually come to replace more
and more of what had been known (for only 400 years after all) as 'work'.
Another notable feature of the ossification of the delivery of cultural entertainment
that has accompanied the growth of the copyright phenomenon in the last two
hundred years is the distinction between 'professional' and 'amateur'. Amateurs
might indeed sing at karaoke bars, but only professionals get paid for singing.
This distinction will break down during the next 20 years as content becomes
universally available through the Internet. Early examples of universal providers
such as YouTube have run into copyright problems, not surprisingly, but by 2020
technology will routinely enable commercial relationships to be set up between
any willing performer/consumer pair.
We can label such technology KISS (Kontent Identification and Subscription
System), which will come into universal use, even in China, with the value of
any given piece of content, regardless of its origin, calculated in real time
based on its audience, and charged to the (compulsory) account of the user.
Content providers (call them musicians, writers, artists, or whatever) will
still able to put their own price on a work, and to withhold it unless the price
was paid, but hardly anyone will do so, due to the difficulty of marketing what
cannot be seen or experienced in advance. Under the KISS system, the cost of
experiencing a piece of content is incurred incrementally during the experience,
so that if after two seconds you know you hate what you are experiencing, you
just switch it off, and it has cost you very little or even nothing.
KISS technology can be applied to all forms of entertainment, including music,
books, magazines, blogs, news, football, painting, and a range of new art-sport-forms
which will develop under the stimulus of the new media, such as virtual beach
volley-ball, which can be either watched (you pay), or participated in (you
get paid).
One useful by-product of KISS will be the creation of an objective measure
of an individual's 'contribution' to the common weal; and if couch potatoes
come under attack in due course in the way that first smokers and now drinkers
and fatties are being ostracized, it will be those individuals with high KISS
ratings who get the best treatment in society and privileged access to the scarce
resources of our threatened planet. Scary? Not really: it's just a way of redefining
money for the coming post-capitalist world.
You have been
reading an entry on the following blog:
It's very confusing to read the newspapers at the moment, with
every economic pundit peddling his or her own nostrum for how to right the wrongs
of the banking sector. And over Davos the air has been positively blue with
a cloud of conflicting agendas for our economic future.
Well, I'm a financial journalist as well. If they can do it, why
can't I? So here goes! You have been warned; now is the time to stop reading.
To begin with a history lesson: Bang!
Big Bang, that is. The process by which partner-based investment
banking firms were absorbed (at mind-blowing cost) into commercial banking firms
who wanted to be 'universal' banks. Mostly this happened in the early 1980s,
and the process largely demolished the centuries-old model in which people with
capital formed private partnerships in which they could make or lose money without
any embarrassing onlookers such as shareholders.
It's fact that investment banking (m&a, ipos, what is now
called private equity, and all the trading that is associated with these activities)
can make silly amounts of money, and occasionally lose it as well. How can there
be any objection to that if it is done in private? There never was any; the
problem has come with the fact that the clever wheeler-dealers who make these
enormous sums of money now do it in the full public view, and that makes them
vulnerable.
The marriage of private and public banking, with a substantial
injection of 'popular capitalism', led to securitization, itself nothing new
(every public company has been 'securitized'), but a dangerous weapon in the
hands of deal-obsessed investment banking magicians. This was the moment at
which, with hindsight, the regulators should have set up a structure to measure
and control the risks being generated by new instruments such as CDOs. But the
regulatory structure is compartmentalized in every country as well as internationally:
retail banking, insurance, futures and so forth.
Understanding the reasons for the collapse that ensued is not
to withhold blame: there was a Faustian pact between the politicians who need
growth to show off to their electorates (and certainly don't understand 'rocket
science'), the inexperienced young bankers who dined out on toxic mortage debt,
and perhaps most culpable of all, the ratings agencies, themselves totally unregulated
and unsupervised, who allowed and encouraged the ball to continue long after
midnight. But it's very difficult to blame the investment bankers; they were
just doing their job.
There's no going back, however. Any sort of forcible separation
between commercial and investment banking a la Glass-Steagall will simply set
back international economic growth by a decade. The ignorance of politicians
about investment banking and the popular anger that results can be cured by
education - you can see this process taking place already as more and more hacks
like myself come to understand that investment bankers are a necessity. 'The
unacceptable face of capitalism' was Edward Heath's comment, and the Germans
simply call them 'locusts'. But we have to accept them, like root canals and
traffic wardens, as a part of our complex society.
As to preventing the next 'crash'? Well, we can't. While human
nature stays as it is, booms and busts are as inevitable as love and infidelity.
What can be done is to fine tune the regulatory systems, try to bring them up
to date and to stop them lagging behind innovation quite so badly in future.
And most of all, say no to any 'solution' put forward by politicians, because
they are the very last people capable of understanding the problem.
The British government is now face to face with the consequences of the mistakes
it has made over the last ten years in regulating and taxing its gaming sector.
It is scarcely the only country to have trodden the same error-strewn path,
but in the case of the UK the damage is greater because of the highly profitable
industry which the government's policies have now almost destroyed.
'For many reasons, increasingly few companies active in the British market
are now regulated by the Commission,' bleats Minister for Sport Gerry Sutcliffe.
So what has happened?
In 2001 the Government replaced its age-old system of taxing punters with a
15% tax on gaming gross profits (and operators also have to pay VAT plus corporation
tax plus a super contribution on any horse-racing turnover to a superannuated,
cosy old industry nag called the Betting Levy Board). This step wouldn't necessarily
have been fatal on its own, but when Internet betting started to supersede the
betting-shop kind, and UK-based operators began to desert in droves to Malta,
Gibraltar, Costa Rica and the Channel Islands, the government imposed a 15%
tax on Internet gaming profits for all those firms which it licensed, and created
a tough licensing regime under the Gaming Commission. But it could only license
firms on its own territory and was forced to allow in all EU-based firms, without
being able to tax them.
Now, with gaming tax revenues disappearing down a black hole, it is having
a King Canute tantrum and wants to impose licensing (and hence taxation) on
all the firms that operate in the UK (ie advertise there for punters). But why
should the EU permit this? There are perfectly adequate regulatory, licensing
and taxation regimes in Ireland, Malta and Gibraltar, all EU Member States,
and where the ex-UK betting firms now prosper. Under what circumstances are
they going to allow the UK to steal their revenues, or to replace their rules
with a new set? And under what law can the UK forbid another properly-licensed
EU operator from advertising freely throughout the EU?
The ECJ's Gambelli ruling in 2003 was unequivocal: gambling is a service and
is subject to EU freedom of establishment rules. There is no way in which one
EU Member State is going to be able to impose its own legislative practices
on another one. The EU Commission has already attacked France on this issue.
It is a mystery how Minister Sutcliffe could be so badly advised as even to
try.
What the government should have done was to accept the inevitable and offer
a light-touch, low-tax regime to compete with Malta et al, instead of hiding
benhind a hypocritical ('protect our children') smokescreen. All it really cares
about is the tax, and now it has lost that along with the gaming industry. The
existing law is a dead letter, as the government is implicity acknowledging:
you can ban a foreign firm from advertising on the Internet, but Berkshire is
not Beijing, and if a 16-year old wants to place bets with a Costa Rica poker
site using his father's Swiss credit card and bank account, who is going to
stop him?
Even now it is not too late for the government to come to its senses, but under
Pastor Gordon Brown's presbyterian theocracy, and faced with the Treasury's
emptying treasure-chest, what chance is there of that? The few remaining British
gaming firms will now pack their bags and leave. 'Mene, mene, tekel upharsin'.
Penelope Wise
Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.
Interested in blogging
on Lowtax? We are currently accepting
submissions!
By hosting your blog on the network you or your company
can expect to benefit from our very high traffic levels.
We boast one of the largest communities of professionals
(tax, offshore, legal, etc) and HNWIs. If you are already
a blogger, but want a wider audience, you can move an
existing blog to our network, or if you've never blogged
before, why not have a go? We'll help you get started...
One of the web's largest and
most authoritative business and investment information sources. Alongside
topical, daily news on worldwide
tax developments, you can receive weekly newswires or
access up-to-date intelligence
reports on a range of legal, tax and investment subjects.
Our 16 constantly updated
intelligence reports cover every important aspect of 'offshore' and international
tax-planning in depth, including banking secrecy, the EU's savings tax
directive, offshore funds, e-commerce, offshore gaming and transfer pricing.
Reports are available for immediate downloading or as subscription
services with news pages.
Advertising & Marketing
With over 50,000 qualified readers every month our web-sites
offer a number of cost effective, targeted advertising,
sponsorship and marketing opportunities:
Display advertising - from 'skyscrapers' to 'buttons'
Content/article submission and sponsorship
Opt-in email marketing
On-line Services Directory listings
Could your corporate web-site or newsletter benefit
from incorporating regularly updated news and content
tailored to serve your clients' interests? We can provide
a variety of maintenance-free news and content solutions
that can be seamlessly integrated and dynamically delivered:
IMPORTANT NOTICE: THE LOWTAX NETWORK has
taken reasonable care in sourcing and presenting the information contained on
this site, but accepts no responsibility for any financial or other loss or damage
that may result from its use. In particular, users of the site are advised to
take appropriate professional advice before committing themselves to involvement
in offshore jurisdictions, offshore trusts or offshore investments. All materials
on this site copyright THE LOWTAX NETWORK 1999 to 2010. Contact
us for further information.
LOWTAX.NET
