David Fuller and Eoin Treacy's Comment of the Day
Category - General

    China H-Shares Advance as Industrial Output Rises, Inflows Climb

    This article from Bloomberg News may be of interest to subscribers. Here is a section:

    China’s industrial output and fixed-asset investment beat estimates for the first two months of the year, adding to recent data suggesting that the nation’s economic recovery is holding up. Depreciation pressures on the yuan have prompted Shanghai investors to buy Hong Kong stocks as well, with net southbound purchases in the past eight sessions rising to 9.8 billion yuan ($1.4 billion). The odds of a Federal Reserve interest-rate increase this week have climbed to 100 percent.

    “The market is extending a rebound after some consolidation in the past two weeks and as mainland funds continue to pile in to hedge against the risk of yuan depreciation after a possible Fed rate hike," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong.


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    Email of the day - on vapes and e-cigarettes

    Hope you are keeping well.

    We are getting loads of orders for Vape labels at the moment and talking to other guys in our industry they are all getting the same - we are talking millions of labels. The industry is seriously expanding, at this time it appears to be multi small to medium players but there must be some serious money to be made somewhere!

    The label, bottle, liquid etc. can't come to more than £1.50 so potential profit is there.
    I know you've probably already had a look but thought I'd mention it!


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    Self-Employed? This Government is Determined to Punish You

    Here is the opening of this topical column by Janet Daley for The Telegraph - note; there have been several different titles for this article.  I have used a slightly shortened version of the original title from the newspaper's printed edition:

    Let’s stop pretending that the storm over Philip Hammond’s Budget and the self-employed is all about white van men. Not that I have anything against white van men. We have a clutch of faithful local tradesmen who have come out to rescue our household from disasters so often that they are now cherished family friends. Indeed, our actual extended family includes a cohort of white van men.

    But the issue at hand is about a huge range of vocations and occupations which do not involve spanners. As well as all the self-employed creative types I listed on this page last week — writers, artists, actors and musicians — there are the IT consultants, the web designers and the digital start-ups leading the technological revolution.

    And then there are the artisan bakers, the small farms reviving traditional British cheeses, and the mothers who create kitchen table businesses so they can work from home instead of being economically idle: all those innovative ventures which have introduced such vitality into the work culture. These are the people the Chancellor has chosen to clobber.

    The Chancellor has attacked enterprise

    Let’s not pretend either that this is only about putting up National Insurance contributions. That is only one front in what is clearly an organised campaign against the self-employed and small business owners who are among the most productive, self-reliant and progressive in the true sense of the word (meaning “encouraging progress”) participants in the workforce.

    There is a pattern here which it is now impossible to miss. The two measures I wrote about last week — the introduction of quarterly tax returns and the effective abolition of the flat-rate Vat system — are going to be devastating. The first of these is deranging and apparently pointless: in future, all self-employed individuals and small businesses will be required to file four income tax returns per year instead of one. These will have to be done digitally using specially designated software. This will, of course, quadruple their accountancy charges at a stroke and require access to online facilities.

    Even more damagingly, this change will oblige them to pay income tax at the end of each quarter rather than, as now, in one or two yearly instalments.

    So if your business is seasonally affected: if you have a healthy quarter (say, in the run-up to Christmas if you produce gifts, or the summer if you are a gardener), you will not be able to spread the cash flow from that good period to cover the fallow one that follows. It will not be possible any longer to even out your good and bad times over the course of the year.

    Of course, your next quarterly return will reflect the loss of business and your tax payment will be adjusted but that will take three months or more to come through. By that time, as almost anyone who runs on a tight margin will know, you could either have gone broke or found it necessary to borrow more to remain afloat.

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    Needed: A Radical Vision That Brings In Lower and Simpler Taxes for All

    It has been widely remarked that our Chancellor of the Exchequer doesn’t appear to have a vision for the tax system. Does this matter? It assuredly does.

    I have often asked why it is that many small countries are so economically successful. The answer, I think, is that their vulnerability makes it essential to get public policy right.

    They simply have no leeway to indulge in grossly incompetent government. That applies, amongst other things, to the three key fiscal questions: how large the government should be; what it should spend money on; and how it should raise the money to pay for whatever it decides to do.

    My favourite example is Singapore, which could have become a 
basket case. Instead, its economic performance has been marvellous, to the point where it now has a higher per capita GDP than its former colonial master, namely us. This is largely thanks to superbly effective government.

    Getting the economic contribution of government right first demands that the governing party is clear about what the state does best and, relatedly, what it is that only the state can do. Making the tax system work effectively clearly falls into the latter category. That is what makes Mr Hammond’s lack of vision so damaging.

    What should he be aiming to do? You could argue that the tax system should be sufficiently simple that anyone and everyone can readily comprehend it and accordingly be aware of the influence of tax on their after-tax returns from different activities.

    Actually, in my view, in an ideal world, the tax system would be so simple and the tax rate so low that people might as well be ignorant of these details. Other than where the public interest is deemed to lie in restricting the production or consumption of “bads”, such as pollution, or the production of public goods or things that have externalities, the best result is achieved when no economic decisions are determined by the influence of tax. Effectively people can just ignore it.

    Admittedly, in practice, British chancellors are seldom in a position to follow such an agenda. They are usually left scrabbling around to find money from any old source, while simultaneously feeling obliged by political forces to dish out much of it to supposedly deserving causes. The result is plain for all to see – a hotch-potch of a tax system with gross distortions to incentives.

    The way to tackle this issue is to think through in advance what you want to achieve with the tax system and to lay out a plan. When the Chancellor has some available fiscal resources to dispose of, he should then use these to make progress towards the desired goals.

    This is critically important because moving to a rational system of tax always creates losers as well as winners and it is important to be able somehow to buy out or compensate the losers. Last week’s shambles over raising national insurance contributions for the self-employed was a clear example of fiscal policy-making without vision.

    National insurance is a tax by another name. It needs to be integrated with income tax. But getting this right, and avoiding the imposition of heavy losses on groups such as the self-employed and pensioners (who don’t pay national insurance), is a mammoth task.

    I believe that the Chancellor should have as his objective the abolition of national insurance. He should make a start by gradually lowering the standard rate, thereby reducing the gap between the effective overall tax rate paid by the employed and self-employed.

    Admittedly, for the next few years the Chancellor is bound to be absorbed with getting the deficit down and it seems unthinkable that there could at some stage be a different agenda.

    Yet, in the 1980s the public finances moved from huge deficit to significant surplus – before the recession of 1990-92 brought the deficit back with a vengeance. Nigel (now Lord) Lawson, the Chancellor during the key part of the 1980s, knew what to do with the room for manoeuvre that the improving public finances afforded him. He believed in lower taxes and a simpler tax system. That is what he delivered.

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    Indian PM Modi Wins Sweeping Victory in Crucial State

    Here is the opening of this informative report from VOA:

    NEW DELHI — 

    Indian Prime Minister Narendra Modi's Bharatiya Janata Party won a landslide victory in the politically crucial northern state of Uttar Pradesh, giving the Indian leader a huge boost half way through his term.

    The country’s most populous state, where the BJP swept away the ruling regional Samajwadi Party, was the biggest electoral prize of the five states which went to the polls in recent weeks.

    "I give my heartfelt thanks to the people of Uttar Pradesh. This is a historic victory for the BJP; a victory for development and good governance," Modi said.

    Modi personally led his party’s campaign in Uttar Pradesh, promising growth and defending his controversial ban on high value currency notes, which many had feared would alienate poor voters in an impoverished state.

    But in a ringing endorsement of the Indian leader, the BJP won the biggest victory secured by any party in recent decades in the battleground state. According to the Election Commission, it was ahead in more than 320 seats in the 403-member state assembly.

    BJP’s chief strategist in the polls, Amit Shah, attributed the huge win to Modi’s pro-poor policies and the “politics of performance.” Calling it a historic mandate, he said that “The country’s poor people have put their faith in a big way in Mr. Modi.”

    Party workers held raucous celebrations outside the party office in New Delhi and Uttar Pradesh’s capital, Lucknow, setting off fire crackers and dancing.

    Political analysts said the resounding victory in Uttar Pradesh puts the BJP in a commanding position ahead of the 2019 general elections and enhances Modi’s reputation as a strong leader who can make politically risky decisions.

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    Rutte, Wilders Swap Jibes in Debate 36 Hours Before Dutch Vote

    Here is the opening of this topical article from Bloomberg:

    Dutch Prime Minister Mark Rutte and populist Freedom Party leader Geert Wilders questioned each other’s credibility and integrity as they faced off on live national television for the first time in the country’s election campaign, just 36 hours before the polls open.

    The Liberal premier said he will not trust Wilders again after the Freedom Party walked away from supporting Rutte’s first minority cabinet in 2012 amid an economic crisis. “I’m not going to work with such a party again,” Rutte said at the end of the debate in Rotterdam Monday. “Not in a cabinet, and not even relying on you for support outside the government. No, never ever.”

    Wilders accused Rutte of breaking promises he made before the elections in 2012. “Who still believes Rutte? I still see him standing there,” the Freedom Party leader said. “We would get tax cuts, a tougher policy on immigration, we would get 1,000 euros. And what came out of these promises? We had record after record immigration. And taxes only increased.”’

    Three opinion polls Monday showed little change in the overall situation in the final stretch before the election. Two showed Rutte’s Liberals ahead of the anti-Islam, anti-European Union Freedom Party by a margin of three to four seats, with the other showing the two parties in a tie. Rutte has overtaken Wilders in most surveys as polling day approaches.

    No party is set to win more than a fifth of the seats in the 150-member lower house, so a multiparty coalition will be needed. All the other major parties have ruled out working with Wilders.

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