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There must be a general election round the corner

Kitty Miv, Editor
15 September, 2015

Kitty's Country Rankings are below, with a description of how they are compiled. 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.

Another day, another tax cut pledge from one of Canada's major political parties. There must be a general election round the corner! And indeed there is, on October 19, when voters go to the polls to elect members to the House of Commons. This time it was Prime Minister Stephen Harper's turn, with the Conservative Government promising a substantial cut in Canada's payroll tax if re-elected. This followed hot on the heels of Harper's proposal to extend and expand the Mineral Exploration Tax Credit which is designed to encourage investment in Canada's vital natural resources industry. In fact, the Prime Minister has been quite busy thinking up ways to tempt the electorate to voting for him again. In past month or so, he has promised to: increase the scope of a tax break helping first-time buyers onto the property ladder; introduce a new home renovation tax credit; increase the value of the tax credit designed to reduce the costs associated with the child adoption process; reward givers to charity under the charitable donations tax credit; and not tax subscriptions to Netflix and similar digital download services. Meanwhile, the opposition Liberal Party has been more direct, pledging to cut income tax for middle-income earners (that strata of voters who so often decide elections) and create a new child benefit scheme. The New Democratic Party's latest proposal, to introduce an innovation tax credit to support cutting-edge private sector research perhaps makes more economic sense, if not electoral sense. Yet, ironically, if they maintain their slender lead in the polls until election day, the NDP could be voted into government for the first time in the party's history. Perhaps the message here is that us voters can sometimes see the bigger picture, and don't always feel the need to be bribed by power-hungry politicians!

Which links conveniently to my next subject. I was going to discuss (i.e. execrate) proposals to allow Australia's tax authority access to intercepted telecommunications information to enable it to tackle tax fraud more effectively (so the taxman can now add "spy" to the growing list of functions he now performs in many countries). However, the political machinations of the governing Liberal/National coalition are a far tastier topic! If Machiavelli had been alive today, perhaps he would base his infamous tome on the intrigues of Australian politics, an arena which would put Renaissance Italy to shame. They tend to breed them tough in Australia, and you need to be if you have aspirations to lead – outgoing Prime Minister Tony Abbott was a pugilist in more ways than one, having boxed in his student days before going on to be a political bruiser who pulled no punches. However, despite his flagging popularity ratings, it was still something of a shock when incoming PM Malcolm Turnbull, who won a party leadership contest on Monday and who, by some accounts, is no stranger to Machiavellian political maneuvers himself, landed the sucker punch that ended Abbott's briefing stint in power. Shocking maybe, but not that surprising when you look at recent Australian political history. Such back stabbings aren't restricted to the coalition. Remember, the internecine struggle for power in the former Labor administration, which saw Julia Gillard oust Kevin Rudd, before Rudd got his revenge on Gillard in the dying days of the malfunctioning government. The saying "keep your friends close, and your enemies closer" is sometimes attributed to Machiavelli. But perhaps it needs tweaking for Australian politics. Maybe "keep your enemies close, and your friends as far away as possible" would be more apt. Joking aside, the antics of Australia's leaders can't be doing its reputation the world of good with investors and multinationals businesses, especially at a time when strong leadership is required to sail Australia through some turbulent fiscal and economic waters.

It's remarkable that I've gone almost six months without mentioning France in this column. But perhaps this was a subconscious act of mercy on my part, with Francois Hollande's ailing presidency lurching from one crisis to the next, and France well adrift of the competition at the foot of our country rankings. But, what's this I see? "Tax cut" and "France" in the same headline? No, my eyes do not deceive me! It is predicted that the income tax cut, to be included in the forthcoming finance bill, will benefit 8m French households. The caveat is that at EUR2bn in total, said households will benefit to the tune of a measly EUR250 each. Not to be sniffed at I suppose, but I expect this tax cut will be recouped in some way in the fine print of the 2016 Finance Bill. However, it is somewhat encouraging that over recent months, the Government has stopped raising taxes, and is talking more about reducing them. Although, in terms of Hollande's popularity, the damage was done long ago, and his legacy will be to leave France with a tax burden about ten percent of GDP higher than the euro area average. What's more, France finds itself bottom of the eurozone league in terms of economic growth, with all other countries having reported data for the second quarter having reported growth. As sports pundits are fond of telling as, as an indicator of performance, league tables don't lie. Nevertheless, it's an encomium this time round, if only as a morale booster.

 

Kitty's Encomiums and Execrations

Methodology: each week (this is the 147th) one or more countries are given encomiums and one or more 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. Germany is at minus 2, 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 then quickly recovered one step. Etc etc.

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.

Kitty's Encomiums

France morale booster

Kitty's Execrations

Canada election fever

Australia Machiavellian

Ciao

Kitty



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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