The Free-Lunch Counter of Offshore Gaming
Kitty Miv, Editor
21 November, 2013
Kitty's Kountry Rankings are below, with a description of how they are kompiled. This week, as every week, I give out Encomiums to countries which have done Good Things, and award Execrations for countries which according to my highly personal and partial views have done Bad Things.
Let's hope that this week's talks between Antigua and Barbuda (David) and the USA (Goliath) represent an outbreak of sanity in one of the silliest and least constructive episodes in recent international relations. I'm offering bouquets on a provisional basis, because it could all still go wrong. So far the progress of the affair has not reflected credit on anyone, except possibly the WTO, which has tried to walk a tightrope between on the one hand infuriating the US, and on the other failing to support a member country which on the face of it has been damaged. I'm not going to try to allocate blame for the original blow-up: it was probably foolish and short-sighted of Antigua to help itself with such insouciance at the free-lunch counter of offshore gaming; but the US, while justified from any legal perspective in its original actions against the operators of Antiguan sites, has seemed unwilling to compromise in subsequent negotiations. The strict US laws against inter-state and international gaming, whatever their original justification in a pre-Internet age, hardly seem fit for purpose in a wired-up, interconnected world, and indeed they are gradually being bypassed, at least for domestic operators, by more modern legislation both at state and federal level. It's time to let down the barriers internationally; and if it's done in a sensible way, the result could be a win-win situation for all concerned: American consumers, the US Treasury and the Davids of The Caribbean.
I'm going to give an award to the European Union for its refusal to rise to Spain's allegations against Gibraltar's low tax regime, alongside the measured acceptance by an EU delegation of new Spanish border controls, which everyone realizes are a tit-for-tat response to Gibraltar's dumping of concrete blocks into its harbour, for some obscure purpose which may possibly have something to do with fishing. The EU is the only party to this imbroglio that has shown a modicum of grown-up common sense. Gibraltar, encouraged by the UK, and Spain, seem incapable of rational behaviour on the subject of Gibraltar's sovereignty. What meaning can be attached to the idea of European unity when this 400-year-old squabble is allowed to smoulder on by two of the EU's largest member states? Spain's tax complaint was curious, given that Gibraltar's tax regime has already been crawled over to exhaustion by the EU Commission and the European Court of Justice. Haven't they got any better ideas? For instance, how about starting an autonomous zone around Gibraltar with zero tax; it would attract business like iron filings to a magnet. Of course, the EU will scream blue murder, but if "autonomous" really meant autonomous - how about calling it Spangaltar - it could apply for separate membership of the EU, just as Scotland will when it separates from the UK. Gibraltar would soon sue for peace!
Now here's a riddle to test your general (well, fiscal) knowledge: what country has both the highest per capita income in the world and the highest per capita public expenditure in the world? And is so short of cash that it is considering raising taxes even higher than they already are? Only a tiny prize for guessing Luxembourg, whose only real rival at the top of the table is Qatar, and it's hardly possible to make a spending comparison. Public spending in Luxembourg per capita (and of course it's a tiny country) is two and a half times more than the Euro-Zone average, at EUR34,400, which is higher than GDP per head for all but a handful of countries. That's "only" 42 percent of GDP, whereas the Euro-Zone average is 50 percent. Spending has gone up by more than 25 percent in the last seven years. Let's duck for now the appalling fact that European governments take and spend half of their citizens' income, and just consider the situation of super-rich Luxembourg, which thinks it has a problem. Well, it does have a problem, but not the one it thinks it has - it's in a Dickensian Micawberish bind:
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."
You can multiply or divide the amounts as much as you want; the same principle applies. Luxembourg is spending too much. Of course, being Luxi-Micawber, and being the epicentre of the "social partners" heresy, the government's reaction is not to save money, but to increase taxes. If only the whole of Europe had Luxembourg's problem, it would be a happy place!
"Now, this is just too easy," said Alice as she followed the Red Queen's instructions. "If I don't like the truth, then all I have got to do is to pretend the opposite, and if I pretend hard enough, it will be true!" In order to be really good at it, one has to do it three times before breakfast, and obviously the Turks & Caicos's Rufus Ewing has been practising hard, since he has found a way of increasing taxes that won't cost people anything. Perhaps the petrol price rise won't cost government ministers anything, if they have cars with chauffeurs who are paid by the state; and if you have a "grace and favour" residence, then indeed you won't need to stay in hotel rooms. What was it that Marie Antoinette is supposed to have said? "If they don't have bread, then let them eat cake." The British Government must be rueing the day that it allowed this speck of rock to take back its fate into its own hands, and perhaps some of the populace agrees, even.
Kitty's Encomiums and Execrations
Methodology: each week (this is the 79th) two or three countries are given encomiums and two or three are given execrations. Well, this week it's just 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. Germany is on + 1, since in the second week it had an execration and in the first week it had an encomium, leaving it at neutral; then it had an execration in week four, thus dropping to – 1, and another one in week six, dropping to – 2; finally in week 13 it got something right, so it went back up to – 1; then in week 16 it gained a further star, so then it was in neutral territory until week 23 when it dropped back to minus one, but reverting to neutral territory in the following week, then dropping to minus one in week 50, and back up to plus one in week 51, then to plus two in week 52. Some weeks ago it dropped a place, but last week recovered one step.
The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but as time goes by they are becoming useful for decision-making. For any country in negative territory, you should think carefully before starting a business there.
Antigua and the USA talking
European Union being grown-up
And Kitty's Execrations:
Luxembourg spending too much
Turks & Caicos in denial
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