Transatlantic tech-tax truce is on a knife edge 23 May 2023 EU-US spats over levies on the likes of Amazon have taken a breather while a global pact advances. But sabres are rattling, led by French Finance Minister Bruno Le Maire. Washington may well be patient with the pace of promised rollbacks, but any new levies would break the truce.
How do you solve a problem like AI? Tax it 18 May 2023 Generative artificial intelligence could put a rocket up company profits, and potentially leave millions jobless. The economic and social disruptions could be profound. But fiscal distortions make it hard to tide over the losers. Closing obvious loopholes is growing more urgent.
Canberra lets energy windfall slip through fingers 10 May 2023 Tweaking an arcane resources tax will bag Australia’s Treasury just $400 mln extra a year. It’s barely a drop of the bumper earnings oil and gas companies drilled from war-stoked commodity prices. A direct levy on outsized profits can better channel cash to the energy transition.
Credit Suisse mess leaves scattered Swiss debris 24 Apr 2023 A $3 bln state-sponsored UBS takeover prevented the failure of Bern’s other big bank. Yet small, export-oriented Swiss firms now only have one large lender for their needs, and additional bank regulation is likely. Meanwhile, historic US tax issues may come home to roost.
EY’s faltering breakup plan tightens Gordian knot 30 Mar 2023 A plot to hive off the consulting unit from the audit practice has stalled. EY has two realistic alternatives: sell a slice of its advisory business, or stay intact and focus more on lucrative consulting work. The catch is that a failed breakup could still leave lasting damage.
Capital Calls: Bank of England, Wonder drugs 23 Mar 2023 Concise views on global finance: The UK central bank has joined peers in raising rates, but there’s not much room to keep hiking. Meanwhile, a drug that might help smokers’ lung is could be good for makers Regeneron and Sanofi, but even better for society.
UK fiscal austerity may not survive next election 15 Mar 2023 Finance minister Jeremy Hunt used 24 bln pounds of budget headroom to boost investment and incentives to work. He also set a trap for the opposition: accept spending cuts after 2024 or be tagged as a high-tax party. Labour Party leader Keir Starmer doesn’t have to take the bait.
UK growth demands better-directed fiscal fireworks 13 Mar 2023 Finance minister Jeremy Hunt’s March 15 budget may feature 30 bln pounds of headroom to ease headaches like workers’ pay. But Britain’s real malaise is a lack of long-term business investment. To keep pace with foreign largesse, Hunt needs to deploy significant tax breaks.
Green subsidy race may be what the world needs 6 Feb 2023 High carbon taxes would be the best way to combat climate change. In their absence, subsidies are a good second best. As the global elephants – the U.S., EU and China – roll out financial aid, the key will be to ensure some fair play so others don’t get trampled, says Hugo Dixon.
Republican tax fantasy cements ugly fiscal reality 20 Jan 2023 U.S. lawmakers are set to vote on a silly plan to phase out the IRS and impose a 30% sales tax that would balloon the federal deficit. It’s going nowhere, but exposes the twisted economic logic in Washington. Small wonder it’s costing more to insure against Uncle Sam defaulting.
Britain can afford to pay nurses and teachers more 20 Jan 2023 UK public workers want a big raise from the government. An inflation-matching pay rise would cost 18 bln pounds; growing state employees’ salaries in line with the private sector around half that. Downing Street could fund it with a 1p rise in VAT and closing tax reliefs.
Capital Calls: Satellites deal, EU gas price cap 16 Dec 2022 Concise views on global finance: Private equity firm Advent is paying a 129% premium for Maxar, indicating that the volatile, costly satellite construction business could soar away from public markets; the EU is edging towards a controversial cap for gas future contracts.
The world can harness trade to save the planet 21 Nov 2022 Trade is a major cause of global warming. The solution is to tax commerce in carbon-intensive goods and remove tariffs on clean ones, to support low-carbon technologies, and to do all this fairly. It’s a priority for next year’s COP28 conference in Dubai, says Hugo Dixon.
Fiscal “black hole” obsession adds to UK problems 16 Nov 2022 Prime Minister Rishi Sunak’s government is set to tighten the public finances by about 50 bln pounds, equivalent to 2% of GDP. Yet the case for such a large package is based on dubious logic. If it’s front-loaded and overly reliant on spending cuts, it will also hurt growth.
Capital Calls: Centrica 10 Nov 2022 Concise views on global finance: The 5 bln pound UK energy group launches a 250 mln pound buyback despite a struggling supply business and windfall tax threats.
BP is case study in global windfall-tax quandary 1 Nov 2022 The $100 bln oil major wants to produce more green energy and less crude. Yet a British windfall tax risks pushing it in the opposite direction. A better levy design would hit outsized profit in both fossil fuels and renewables, while still incentivising investment in the latter.
Italy’s new premier starts with a big faux pas 27 Oct 2022 Giorgia Meloni vowed to hike a 2,000 euro cap on cash payments, reversing attempts to boost electronic transactions. That will make it harder to track 100 bln euros of annual untaxed revenue. With debt at 147% of GDP, Italy cannot afford to be complacent on chronic tax evasion.
Italy’s new boss is missing a trick on tax evasion 24 Oct 2022 Public debt at 147% of GDP and a slowing economy limit Prime Minister Giorgia Meloni’s scope to curb an energy crisis and keep spending promises. Tackling endemic tax evasion would give her more fiscal ammunition. Yet promoting the use of cash and tax amnesties will not help.
Truss’s exit highlights America’s free pass 21 Oct 2022 U.S. fiscal policies, based on tax cuts for the rich and widening budget deficits, have been fairly similar to those of Britain’s ousted prime minister. Only the dollar’s status as the world’s reserve currency keeps the laws of economics from applying in the United States, too.
Britain’s next leader will be on a short leash 20 Oct 2022 Prime Minister Liz Truss is out after just 44 days in office. Whoever replaces her will have to endorse fiscal discipline or risk a similar fate. The ruling Conservatives have little in common except fear of an early election. But only a national vote can restore political order.