Day: May 24, 2021

Who will really pay the “own revenues”?

Spoiler alert: consumers will.

Ever since the recovery package of the European Union was sent on its way through the institutions in Brussels, everyone knew that the joint debt obligations that the EU took up until 2058 need to be paid back somehow. This is particularly true because now that we’ve opened the slippery slope of taking up EU debt, you can rest assured that it won’t be the last time we will do it. The 750 billion Euros are said to be paid by own EU resources, meaning taxes.

On January 1st this year, the EU’s plastic tax has come into effect. The tax charges EU member states for their plastic packaging consumption and demands that a pro-rata amount be sent to Brussels for the EU budget. Also being discussed are a carbon border adjustment (fancy words to describe a CO2 tax), a digital tax, and a financial transaction tax. For many in the EU, this will allow the Union to become more independent from the interests of the European Council, to which the Commission all too often feels, and is, beholden when most of its more integrationist support lies in the European Parliament.

But who will actually pay these taxes? Is it that a digital tax on Microsoft, Amazon, Google, Apple, or Facebook, will be paid by these big corporations from accross the pond and flow into the pockets of Berlaymont? Hardly so. The EU suggests taxing digital services where their transaction occurs, as opposed to taxing in the company’s country of residence. In the case of Apple, European sales are organised through the company’s HQ in Dublin, Ireland, to benefit from Ireland’s more advantageous tax system. In a similar way, Amazon benefits from rules in Luxembourg. Google and Microsoft sell more digital services, in the case of Google advertising services. Here, the cost of a tax would, much like VAT, put on the end consumers. This comes down to much of the free trade argument: the resident consumers pay protectionist tariffs in the country that imposes the tariff, not by the exporting party.

A carbon tax on imports does exactly that. Some goods coming from countries that do not share the EU’s ambitious climate regulations are competitive in price due to the low production costs in those countries. Attempting to push these goods off the market with a carbon tax means that EU consumers will pay more.

A financial transaction tax is an even more egregious example of misguided fiscal thinking. In the eyes of its advocates, it will hit the big players on the international financial markets, when instead it will be paid by low-level investors, low-level shareholders, consumers playing around with investment services that have popped up, particularly during the pandemic. 

It narrows down to the economic reality that companies do not pay taxes; people do. The building of a company cannot pay taxes; but is being paid because either the company reduces its share dividends of its shareholders, pays its workers less, or increases prices for consumers. All too often, the latter is the preferred solution.

The discussed EU taxes are supposed to create independence for the Union and tax big players to reduce inequities. It is more likely to do the former than the latter.

Originally published here.

Time for a rethink on the UAE’s red listing? An open letter to Grant Shapps, the UK’s Secretary of State for Transport

As the UAE’s coronavirus cases continue to decline, and the nation is named as one of the most covid-resilient in the world, Arabian Business is urging a rethink on the emirates’ Red List status.

Dear Mr Shapps,

It is perhaps fitting that I write to you as the Arabian Travel Market takes place in Dubai, a safe live event of global significance that I know many tourism representatives from the UK wanted to attend, but cannot.

You are of course aware of this because your Green List of safe travel destinations came into effect this week, a list that not only omits the UAE but keeps the country on your Red List.

While you will keep your counsel on this matter, the safety of the UK being your prime concern, I would urge you to reconsider this decision at the earliest opportunity (you were to review this every three weeks), and I ask this based on the following:

As the Arabian Travel Market took place in Dubai with attendees from 90 countries, on May 17 the number of new cases of coronavirus in the country fell to just 1,229, while the number of vaccine doses administered rose to 11,489,475, with a rate of 116.17 doses per 100 people.

The UAE has been consistently one of the world’s leading vaccinators and yet travel between it and the UK has been prohibited, which is to the detriment of the travel and hospitality sectors in both nations.

However, this isn’t the only reason I urge you to rethink.

On Friday, May 14, Arabian Business reported how a new report suggested the UAE is the second-most pandemic resilient country in the world. The Pandemic Resilience Index ranked 40 countries on factors including vaccination approval dates, vaccination drives, critical care bed capacity and mass testing.

The study – conducted by advocacy group Consumer Choice Centre (CCC) – aimed to provide an overview of global health system preparedness for the Covid crisis.

Israel topped the list, followed by the UAE, the US, UK and Bahrain respectively. Ukraine was last on the list of those countries, at number 41.

It is worth noting that Ukraine on May 17 had 2,136 new daily cases, nearly double the cases of the UAE, and its death toll stands at 48,184 compared to the UAE’s 1,633 (nearly 30 times fewer).

I only highlight its figures to point out that it is on the UK’s Amber List, as indeed is the USA.

Statistically, I would urge that numbers alone justify a rethink on the Red List status of the UAE.

Indeed, Fred Roeder managing director, of CCC, who led the Pandemic Resilience Index, said: “The UAE is a country that managed to quickly kick off its vaccination campaign, vaccinated over 50 percent of its population [by March 31] and has carried out extensive testing – which is why it performed so well in the index.”

Roeder continued to describe how the UAE stands out on testing and is markedly ahead of countries such as Germany, Czech Republic, Hungary, France, Lithuania and Italy.

The UAE is a country whose residents and businesses have a strong sense of respect for the coronavirus precautions put in place by the government. Our initial lock-down in 2020 was comprehensive and rigorous, with curfews in place, and permissions to be sought for leaving the home, even for grocery shopping. The UAE was among the first countries in the world to close schools, in early March of 2020.

Our vaccination take-up has been world-leading, and quite simply we do, in large part, follow the rules. There is no argument over mask wearing, here that is respected, and there are fines and measures large enough to deter non-compliance. Almost 90 percent of people surveyed saw Dubai as the safest place in the world after it re-opened, according to independent research conducted by GRS Explori, a world-leading research company for exhibitions, visitor attractions and large events and research partners of UFI, The Global Association of the Exhibition Industry.

Likewise our hospitality industry has responded in an almost heroic fashion, here hotels and restaurants are run with a world-class degree of professionalism, with operators committed to keeping customers and staff safe. They have learned lessons at every juncture of this pandemic.

And regular inspections by the authorities ensure that rules are followed at all venues, it’s that simple.

These same world-class precautions are clearly visible at our airports, with contactless check-in among the many safety features, and on board our flights, with every passenger arriving requiring a negative PCR test. Each visitor is also required to download a highly successful track and trace app.

The UAE is welcoming and deserves your attention again.

On June 7, on behalf of Arabian Business at the very least (and anyone else who chooses to add their voice to this letter) I ask you to think again and remove the UAE from the UK’s Red List.

Originally published here.

Biden’s $100 Billion Push for Broadband Equity Is No Panacea

In our pandemic age, high-speed internet has become a necessity. Whether paying utility bills, logging in for school, or sending job applications, the transition from paper and pen to browsers and email has been swift.

It makes sense that President Joe Biden and the Democratic majority in Congress want major investments in internet development.

“A chicken in every pot, a broadband connection in every home,” to use an FDR-ism.

As part of the American Jobs Plan, the Biden administration wants $100 billion to bring “affordable, reliable, high-speed broadband to every American.” A similar bill introduced by Rep. Frank Pallone (D-N.J.) seeks $109 billion for more rural connections, municipal internet service providers, and technology training for seniors.

It is true that a “digital divide” exists in our country; many populated areas of the country have a rich competition of internet providers and higher speeds while rural and tribal lands are lacking in options.

And while there is a noble push for broadband “equity”, the reality is billions in spending and centralization of policy don’t address the real problems and won’t deliver as promised.

There are thousands of different rules between municipalities and states overseeing internet infrastructure that serve as a barrier to getting more Americans connected.

A 2018 study by the Federal Communications Commission on state and local regulatory burdens found over 700 individual examples of laws and statutes that hamstring internet providers before they even connect one home.

These include ambiguity on application processes, high permit fees for networks, slow approval, burdensome rules, and more.

With a complex regulatory environment and uncertainty on whether projects will even be approved, it is easy to see why hurdles exist.

In a congressional subcommittee hearing in Washington earlier this month, witnesses argued federal funds to deploy broadband, or even empowering municipalities to start their own internet companies, would be most impactful.

But that stands against the evidence on municipal networks and changing trends in the telecom space.

A 2017 study from the University of Pennsylvania found local government internet utilities are entirely too expensive to maintain and that some will take decades to recover their initial costs. In many cases, municipal fiber projects led to municipal defaults and the need to raise taxes and bonds to offset costs.

The Taxpayers Protection Alliance maintains an active list of every failed municipal broadband network in the country, and it grows by the month.

The main assumption of these billion-dollar broadband plans is that we should use our resources to focus exclusively on broadband fiber connections while avoiding investment in mobile and satellite networks that are vastly cheaper, more efficient, and provide fast speeds.

Elon Musk’s SpaceX recently launched an additional 60 satellites for his Starlink project, which aims to provide low-cost satellite broadband internet across the world. By the end of 2021, there will be 1,000 satellites providing internet to over 10,000 customers worldwide, accessing download speeds of up to 300 megabits per second, above and beyond the FCC minimum of 25 megabits per second.

Rather than put all our resources in wired broadband connections, the government should practice technology neutrality – not favoring one technology over any other. That is the smartest way to provide coverage to every American.

For instance, 15 percent of Americans rely on smartphones for their internet and do not have broadband at home, according to Pew Research. That is equally split between urban and rural regions of the country. Whether that is because no broadband options exist, or because consumers prefer mobile internet, however, is not clear.

But what is clear is that as mobile networks expand and speeds improve, as they have done for the last decade, and we continue to expand fiber and satellite options, more Americans will be connected to faster and better internet. However, in order to do that, we need the power of private investment, clear regulatory rules, and the removal of red tape.

If our goal is broadband equity, we need every solution available, not just those cooked up in Washington.

Originally published here.

Parenting, not paternalism, defeats bad diets

Parents are the best judges of the education of their children.

The European Union regulates so-called “junk food” advertising, in order to protect children from exposure to harmful content. Its rules target food that are high in energy, saturated fats, trans-fatty acids, sugar and salt. This really translates as a massive distrust in parenting.

It undoubtedly sounds terrible when we read the words “advertisements targeting children”. Children, being the most vulnerable people of all, shouldn’t be targeted like the same way a hunter peeks through a scope, which seems to be the semantic implication when the word is used. In reality, it’s hard to imagine that many consumers would regard a TV ad for corn flakes that includes a cartoon character, as predatory behaviour by marketing companies.

And yet, this is precisely what lead Chile to ban these characters on cereal boxes earlier this year, and has motivated British star-cook Jamie Oliver to demand a similar rule in the United Kingdom, despite practicing the same in his own videos. We all know the saying: do as I say, not do as I do.

Some campaigners will find this hard to believe, and yet: removing Tony the Tiger from a cereal box won’t make children eat healthier all by themselves. The entire reason why children are not considered adults, is because they cannot properly evaluate the results of their actions, and they will eat anything sweet or fatty that tastes good to them.

Unless we were to remove children completely from their parents, there would be no way for us to make sure that their nutrition is entirely according to the guidelines of national health ministries.

Between a child (as opposed to youth) seeing an advertisement and the act of purchasing the product, there is a parent who has to make the decision whether or not to allow the child to receive it. By restricting the ability to market the product, we’d forgo the judgement of the parents. Far worse, such restrictions would tell parents that the government does not believe that they are able to do their job properly.

In a similar manner, alcohol and alcohol advertising is perfectly legal and available, yet we trust the resounding majority of parents to provide educational background on alcohol to their children.

Raising awareness about the consequences of too much sugar and fat is the right way of going about this problem: it empowers consumers by providing them with information, and endorses a non-paternalistic approach. The last thing we need is for the advancements in public health to backfire due to restrictions on marketing.

As a matter of fact, branding bans can indeed backfire. Brands establish consumer loyalty, yet they can equally reverse it very quickly. If a producer is know for its brand name or logo, making mistakes will make recognizable marketing into a liability. On the other hand, competitors can exploit marketing techniques to sell better products.

Most of all, advertising bans are lazy decision making. The conversation about the education of children, and the gap between counselling parents and interfering in what they see fit for the education of their children is narrow, and requires intricate analysis.

Restricting the advertisements of “predatory” companies on the other hand is a far simpler solution to understand. It’s very much the equivalent of Ostrich effect: if I do not see it, I can make the problem go away. But as the problem does not go away with this particular ban, it is very likely that conclusion will be reached that

A) the ban wasn’t stringent enough, or that

B) MORE bans are necessary. As a result, we’re being trapped with a legislative avalanche that does not empower consumers.

Parents are the best judges of the education of their children. We should empower them as consumers through information, not paternalism.

Originally published here.

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