Category: General

Two emerging technologies that are rapidly becoming mainstream. The first which we all know,is the self-driving vehicle, guided to the quickest route by real-time traffic updates and to the next customer by real-time passenger requests.

The second is blockchain-enabled, secure peer-to-peer (P2P) transactions that eliminate or minimize the need for centralized authorities such as banks or ride-sharing services such as Uber and Lyft. The security of blockchain will allow owners to directly rent out their vehicles under terms and conditions they set themselves.

In a press release published on January 9, the central government reported the following increases in tax collections during April-December 2016, compared to the corresponding period of previous year:

1. Central excise duty: 43 percent.
2. Service tax: 23.9 percent.
3. Customs duty: 4.1 percent.
4. Corporation tax: 4.4 percent.
5. Income tax: 24.6 percent.

These are large values. Holding other things constant, they suggest buoyant economic activity. But as Suyash Rai writes, when looking at tax data, we have to look at the extent to which other things are indeed constant. When analysing tax data, in order to read the state of the macroeconomy, we need to adjust for the part of the tax revenues which are on account of ‘Additional Revenue Mobilisation’ (ARM). Two kinds of ARM are:

1. An increase in tax rate: additional revenues due to higher rate do not indicate robustness of the underlying activity.
2. An administrative measure: additional revenues from one-time administrative measures (eg. a tax amnesty scheme) may not reflect the underlying economic activity.

Let us walk through the major taxes, and see what we can tell, and what we do not know.

Excise duty

The biggest increase in tax collection has come from excise duty. The collection during April-December 2016 was 43 percent higher than the corresponding period in 2015. Collection grew by 45 percent in April-October, 33.7 percent in November, and 34.8 percent in December, compared to the corresponding periods of previous year. Without ARM the numbers are flat as shown below.

Service tax

During April-December, 2016, service tax collections were up 23.9 percent compared to the corresponding period last year. During April-October, the increase was 27 percent, while it decelerated to 15.5 percent for November and 3.67 percent for December. This deceleration is significant, but we need to understand the increase without ARM.

Customs duty

During April-December 2016, customs duty collection has increased by 4.1 percent, compared to the same period in 2015. During the corresponding period in previous year, the growth in collection was 17 percent. For November 2016, collection increased by about 16 percent. However, for the month of December, the customs collection was 7.6 percent lower than the same month in 2015

Corporation tax

Corporation tax collection during April-December was 4.4 percent higher than the corresponding period last year. Last year, during the same period, the growth in corporation tax collection was 11.74 percent. Collection in December 2016 was 4.7 percent lower than that in December 2015.

Income Tax

During April-December, income tax collection was 24.6 percent higher than that in the corresponding period of 2015. However, a key factor here is the income declaration scheme that ended on September 30, 2016, and had mandated payment of tax, surcharge and penalty by November 30, 2016. The expected tax inflow from the scheme was about Rs. 30,000 crore. This is a form of additional revenue mobilisation. Hence, unless we know the increase without this ARM, it is difficult to interpret the number. For instance, if Rs. 25,000 crore was collected under the scheme, the increase in income tax collection during April-December would be just over 8.3 percent.

Conclusion

The analysis presented by Suyash Rai here suggests that the reading of tax collection numbers as signifiers of robust economic activity may be too optimistic.

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The number of Digital transactions globally have doubled between 2010 and 2015 thanks to the convenience of new technologies like online banking ,smart phones, Intermediaries and cryptocurrencies.There is a global push by lawmakers to eliminate the physical cash around the world under the guise of fighting criminal activities or terrorism. I think the sole purpose of war on cash is to increase tax collection

Governor Urjit Patel’s job is to protect the RBI’s reputation, not the government’s. He’d be wise to start acting like it.Even Market volatility is all about confidence in central bank and Indian currency, bonds and equity markets have shown resilence and low volatility simply because of confidence in central bank and its previous governor . its high time Dr Patel gives that confidence to markets.

Ever get the feeling you’re being watched?

It’s because you are – and for a rough proxy of this, use the browser extension Ghostery to see how many tracking scripts are watching you on a typical media site. (It doesn’t work for everything, but a large media site like Vice.com has 50+ trackers, with 40 of them focused on advertising).

Capturing this user data helps sites sell their inventory to advertisers, but a select few companies operate in this capacity at a whole different level. Google and Facebook are the best of examples of this, as nearly $0.60 of every dollar spent on digital advertising goes to them. They both have the sophistication and ubiquity to capture incredible amounts of information about you.

GOOGLE IS EVERYWHERE

Oxfam today in Davos released a report, ‘An economy for the 99 percent’, which shows that the gap between rich and poor is far greater than had been feared. It details how big business and the super-rich are fuelling the inequality crisis by dodging taxes, driving down wages and using their power to influence politics. It calls for a fundamental change in the way we manage our economies so that they work for all people, and not just a fortunate few. Consider the following

• The richest 10% in India own 80% of its wealth, while the richest 1% possess 58% of all wealth
• Fifty-seven billionaires in India possess as much wealth as the poorest 70% of the country

• Since 2015, the richest 1%, globally, have owned more wealth than the rest of the planet.
• Eight men listed below now own the same amount of wealth as the poorest half of the world.
• Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people.
• The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much.
• In the US, new research by economist Thomas Piketty shows that over the last 30 years the growth in the incomes of the bottom 50% has been zero, whereas incomes of the top 1% have grown 300%.

.Oxfam is also calling on business leaders to play their part in building a human economy. The World Economic Forum has responsive and responsible leadership as its key theme this year.  They can make a start by committing to pay their fair share of tax and by ensuring their businesses pay a living wage

The world’s 8 richest people are, in order of net worth:

1. Bill Gates: America founder of Microsoft (net worth $75 billion)
2. Amancio Ortega: Spanish founder of Inditex which owns the Zara fashion chain (net worth $67 billion)
3. Warren Buffett: American CEO and largest shareholder in Berkshire Hathaway (net worth $60.8 billion)
4. Carlos Slim Helu: Mexican owner of Grupo Carso (net worth: $50 billion)
5. Jeff Bezos: American founder, chairman and chief executive of Amazon (net worth: $45.2 billion)
6. Mark Zuckerberg: American chairman, chief executive officer, and co-founder of Facebook (net worth $44.6 billion)
7. Larry Ellison: American co-founder and CEO of Oracle  (net worth $43.6 billion)
8. Michael Bloomberg: American founder, owner and CEO of Bloomberg LP (net worth: $40 billion)

KKR  one of the largest private equity firms in world , in its 2017 outlook  believe that there are four major potentially secular changes that all investment professionals must consider: fiscal stimulus over monetary, domestic agendas over global ones, deregulation over reregulation, and a broadening of outsized volatility from the currency markets to include global interest rate markets.

The two most necessary preconditions for successful investing are 1.) insight and 2.) patience.  One without the other will do you absolutely no good.  Held patiently, a diversified portfolio of the right investments can yield strong results.