Trump-Tariffs have shaken the foundations of global trade; but every good tax deserves another and countries have responded in kind. Eleven nations have gone ahead with a revised Trans-Pacific Agreement. The ‘Yellow Vest’ protesters have scorched a cavernous hole in the French national budget and Germany contemplates the introduction of a new tax in 2019 to curtail the radicalization of its Muslims. France’s Bruno Le Maire is weary of the slow progress of the EU to finalize a new EU-Wide levy on digital-giants and has gone ahead with a ‘GAFA tax’ in 2019. The new Digital-Tax is named after Google, Apple, Facebook and Amazon and aims to make these companies pay a fair share of taxes on their considerable business operations in Europe. The low tax rates paid by US technology giants in Europe has caused resentment. Ireland, which is enfolded in the ‘May-hem’ of Brexit, is host to the European headquarters of several US technology giants and is leading a small group of Nordic countries including Sweden and Finland alongside the Czech Republic in a subtle resistance against such measures. They are fearful of reprisals against European companies and argue that such a tax has the potential to stoke anger in the US. The OECD, which groups major world economies, is working on a proposal for a new international scheme that would regulate taxation on technology firms. Policymakers across the world have had difficulty in taxing the US-based giants who dominate their sectors internationally, but who often route their revenues and profits through low-tax havens to reduce their liabilities.
France’s provocative move to introduce the tax on January 1st, 2019 may have its genesis in domestic budgetary lamentations. New sources of revenue are needed to plug the sinkhole created by pressure from ‘Yellow Vest’ protesters who forced Emmanuel Macron to announce a series of measures for low-income families, creating a multi-billion-euro crater in the French national budget. The European Commission published proposals in 2018 for a 3% tax on the revenues of large internet companies with global revenues above €750m (£675m) a year and taxable EU revenue above €50m. The original Franco-German GAFA proposal that would impose a 3% levy does not include data sales and online platforms. Instead it focused principally on advertising revenues. But legislators fear an EU tax could breach international rules on equal treatment for companies across the world.
A levy of 7% on online purchases of goods and services via the internet from companies resident abroad, that are not subject to taxation in Trinidad and Tobago was implemented in 2016 to tackle foreign exchange demand and to help manage the increase in foreign exchange outflows from online purchases, reduce revenue leakage and assist local manufacturers and service companies to compete with overseas retailers.
German lawmakers in a bid to curb a potentially radicalizing foreign influence on its Muslim residents are mulling over a new ‘Mosque Tax.’ The initiative will help Islam in Germany to free itself from the influence of foreign states and get a stouter domestic orientation. Independent financing it is believed would make congregations in Germany shed all reliance on imposed clergy from abroad who seek to implant their ideologies through resident clerics. Other suggestions include legally obliging Imams preaching in Germany to upload their sermons on the internet unedited to purge the society of miscreants who misguide impressionable youth. The special tax is expected to be paid by all practicing Muslims in Germany, which would then be redistributed by the state among all officially registered Islamic religious institutions. A similar tax already exists in Germany and some other European countries for Catholic and Evangelical Christians. Experts describe Germany’s Salafist scene as a rapidly growing trend in the broad range of Islamist groups. In December 2017, the Office for the Protection of the Constitution, the country’s domestic intelligence agency, estimated that there were around 10,800 Salafists in Germany. The majority of these were classified as political Salafists, who focus on proselytizing.
Further afield a revamped Trans-Pacific Partnership (TPP) among eleven countries came into force on 30th December 2018 opening up vast export opportunities. The new agreement has the potential to deliver an estimated NZ$22 million (US$149.01 million) of savings on tariffs to New Zealand’s exporters. The pact does not include the United States after Washington pulled out of the negotiations in 2017. Vietnam will join the group on January 14th, 2019 with Brunei, Peru, Chile, and Malaysia to begin trading 60 days after they ratify the agreement. Australia sees the agreement as a receptacle to boost the export orientation of its agricultural production.
By April 1st, 2019, U.S. wheat will face a 40 % per bushel, or $14 per metric ton, resale price disadvantage to Australia and Canada. The new accord called ‘The Comprehensive and Progressive Agreement for Trans-Pacific Partnership’ (CPTPP) will reduce trade barriers and tariffs in economies that collectively amount to more than 13% of global gross domestic product (GDP) – a total of US$10 trillion. Shinzō Abe, has invited Britain into the Pacific free trade pact beyond BREXIT. A good part of 2019 earnings expectations and counterterrorism measures could depend on tariff deals, taxes and a wide variety of export duty cuts for businesses.