A monthly side-ways look at tax news from around the world. This week we've got record national tax revenues, record billionaire tax avoidance, a Bali break and a lesson on how to get a Democrat to pay for a Republican tax cut.
For those barcode technophobes, the news from Belgium gets better. In Molenbeek-Saint-Jean, its mayor has introduced a €5,600 (US$5,689) tax per self-scanning cash register in shops. Naturally, the local trade bodies are up in arms but the official line is it's good for revenue generation, job protection and ‘social cohesion’. Supermarkets will be expected to declare the number of self-scan cash registers and if they don’t they’ll be automatically enrolled for the tax plus an additional 10%.
Road-pricing constitutional amendment
The Swiss, recognising the future extinction of revenues from fuel and Road taxes as Electric vehicles proliferate, plan to introduce a mileage tax for vehicles by 2030. Plans are to tax a fixed amount per kilometre driven and the type of vehicle, although the government says it’s unsure how to levy the tax. But Switzerland being Switzerland, it will need a constitutional amendment to introduce it, so no likely problems there then.
Bali welcomes nomads
As the UK Office for Tax Simplification considers the future tax, national insurance and pension implications of people working from the home, office or overseas and all their permutations, how many will consider Bali’s tax temptations?
Indonesia’s tourism minister, Sandiaga Uno announced a five-year ‘digital nomad visa’. It would allow freelancers' Residency on Bali’s black volcanic beaches or the shores of Sumatra’s Lake Toba, tax-free for five years providing their earnings come from companies outside of Indonesia.
How to turn $1bn into $340m
And if you want to pay for the relocation you could try winning the $1.02 billion Mega Millions US lottery jackpot, although taking into account Tax, perhaps not. CNBC pointed out that billion dollar prize will be considerably smaller than you might think.
It seems most winners take the cash option of $602.5 million rather than the annuity. According to CNBC’s calculations, you’d be hit with a federal withholding of tax of 24% reducing your take by a minimum $144.6 million. Because the top rate of federal tax is 37%, there would likely be another $78.3 million to pay. That leaves you with $$379.6 million out of $1.02 billion. And that is without state taxes which could be nothing or at least 10%.
Billionaires' lesson on how to get a 3.4% tax rate
On the other hand, should you employ the financial advisors of the 25 wealthiest Americans you might be able to reduce that lottery tax bill. According to investigative journalist charity, Propublica, between 2014 and 2018, they collectively earned $401 billion but paid just $13.6 billion in taxes.
Or put it another way, the billionaires paid an effective tax rate of 3.4% compared to the average US couple who pay 26%, with the higher earners paying up to 37%. See, it pays to get good accountants.
Emergency health budgets good for fuel subsidies
In another effort to show the US taxpayers how the elite handle cash, twenty-one state attorneys general have mounted legal challenges to allow President Biden’s Coronavirus relief package to pay for state tax cuts. Congress put few restrictions on the use of the $350 billion except for emphasising that it could not be used for state tax cuts.
But as the Washington Post points out the states, boosted by the support of the US Chamber of Commerce, are winning the legal battle. In Florida, the legal wrangling has enabled Republican governor Roy DeSantis to leverage about $200 million in federal Coronavirus aid to help pay for a planned suspension of the petrol tax this October.
Too much for Ireland and Japan
From the viewpoint of a tax collector, there is better news from Japan. Its Finance Ministry reported that tax income for the latest fiscal year was 67 trillion yen ($492 billion), a record take. Unexpectedly large revenues in sales and Corporate tax gave some cheer to the government but such coffer boosts will not make a dent in the country’s level of national debt.
It should have been good news for Ireland too. It reported 25% more tax in the first half of the year than the same period in 2021, with corporate receipts rising by 52.9% year-on-year. But it seems that Ireland relies on just 10 multinational firms to pay over half of the country's corporate tax receipts and the Ministry of Finance’s chief economist, John McCarthy, said that fact represented an "incredible level of vulnerability".
Tax, what tax?
Finally, as if to prove that you can’t keep a good multinational down, US drugmaker, Merck, received the wrath of US senators. It emerged that the company booked virtually no revenue on its top-selling cancer drug Keytruda in the US. It avoided billions of dollars of US taxes, even on sales in the country. Merck’s defence? Its patent was Dutch and it was made in – Ireland.
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