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A series of shoddy, venal and sometimes corrupt governments - By Kitty Miv, Editor

Kitty Miv, Editor
24 May, 2012

Kitty's Kountry Rankings are below, with a description of how they are kompiled. This week, as every week, I give out three Encomiums to countries which have done Good Things, and award three Execrations for countries which according to my highly personal and partial views have done Bad Things.

Australia wouldn't have been winning many Brownie points from me lately, but I have to say that the government has been making an effort to help people to save responsibly, and that includes making saving tax-efficient. In fact, quite remarkably, there has been a degree of continuity across governments of differing persuasions, through the Stronger, Fairer, Super Duper Whatever which has gradually been put in place over the last few years.

The United Arab Emirates, in the shape of Dubai, is my second good news story this week. The terrible real estate mess-up, which for some people may indeed be the whole story, shouldn't overshadow the fact that Dubai has been getting everything else right for the last fifteen years. Now, in a world where so many countries have flat or even shrinking economies, Dubai lines up with the select few that are going to grow more than expected this year. Why? Well of course it's because of low or no taxes. OK, Allah was kind enough to sit the UAE on top of a lake of black gold, but of itself that doesn't make for prosperity: more often than not it ends up by destroying productive capacity in the rest of an economy. Just look at the ruination of the UK as a result of all that oil and gas in the North Sea. Cyprus will do its best to copy the UK in that respect over the next ten years!

Another counter-intuitive story this week has been Ireland's determination to stick with its low corporate tax rate (after Cyprus, the lowest in the EU). A series of shoddy, venal and sometimes corrupt governments has led the country into its current catastrophic condition despite all the advantages possessed by the Celtic Tiger in the last quarter of the 20th century. Now at least they are clinging on determinedly to the one thing that may help them to avoid final bankruptcy, and that in the teeth of resistance from Brussels and their high-taxing competitors on the Continent.

Now we are for the dark; and nowhere darker than Hungary, which after being saved earlier this year by an impressive display of right-thinking international solidarity from a lurch towards fascism is showing its gratitude by setting about taxing everything that moves. What a rotten idea to tax telecommunications! And that on top of VAT. If there is any one vital 'factor of production' (to use economists' jargon) that is required to underpin success in our post-industrial world, surely it must be extensive and cheap connectivity. I don't suppose the tax will even work at the level of raising revenue: Hungary is a land-locked country, so with Skype, ever-cheaper mobile roaming, courtesy of the EU, and a burgeoning host of cloud-based communications technologies, people have options and won't be slow to work out how to dodge the new tax.

It's way too easy to punch Spain. If this is a conservative government, give me Marxism, the voters must be saying. But it's not taxes that are the problem this week, for a change, it's the new government's relapse into a historically xenophobic, anti-British set of attitudes which may have been appropriate in the 18th century but don't belong in modern Europe. Wrecking the long and careful confidence-building process that had almost brought about a resolution of the Gibraltar problem is a piece of mindless hooliganism. And to what purpose? Queen Sophia's calculated snub to the British Olympics, by comparison, seems little more than a minor piece of rudeness.

Another easy target nowadays is the United States, still under the baleful, baneful influence of anti-internationalist Democrats. The craven Commerce Department needs to be abolished, as actually proposed by failed presidential candidate Ron Paul; unfortunately it is still very much alive, hammering nails into the coffin it is building for American industry. Its latest crime is of course the decision to impose anti-dumping duties on imports of Chinese solar panels, in defence of America's uncompetitive and highly subsidized manufacturers. Commentators immediately pointed out that for every job that might be saved, ten would be lost in the installation sector as customers choose not to buy over-priced panels. Why is it so hard for people to understand that if a foreign country wants to give you cheap goods, you should smile happily, accept the willingly-offered present and retrain as a maintenance technician?

Kitty's Encomiums and Execrations

Methodology: each week (this is the third) three countries are given encomiums and three are given execrations. Those are the entries below with descriptive links. In the following week, each encomium counts as + 1 for that country, and each execration counts as – 1, being added to that country's existing score. Over time, therefore, a ranking will build up for each country, and further countries will join the listing. This week, for example, Germany has a ranking of 0, since last week it had an execration and in the first week it had an encomium.

The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but hopefully one day they will become useful for decision-making, even if for the moment it is all just an amusing game.

Kitty's Encomiums:

Australia supports saving

Canada + 1

Dubai bounces back

Hong Kong + 1

Ireland sticks to low tax rate

New Zealand + 1

The Philippines + 1

Russia + 1

Germany 0

And Kitty's Execrations:

Australia – 1

Hungary heaps Pelion on Ossa

India – 1

Spain – 1

Spain forgets the Treaty of Utrecht (again)

United Kingdom – 1

United States – 1

United States being anti-trade, protectionist





About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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