Economic history has a way of shifting in life cycles. The Bretton Woods era and the Marshall Plan set the stage for the post-Second World War economic order. The launch of the World Trade Organisation and the Brady Plan for debt shaped the post-Cold War Golden Era of globalisation.
Ms Yellen’s push for a baseline on corporate taxation comes as policymakers seek to lay the foundations for a post-Covid-19 and increasingly carbon-neutral economy.
While a global standard for corporate taxes may sound dry, it in fact represents a step change from capitalism as we know it. Taken in a context of rising progressive pressure for reparations for colonial economic exploitation, the move lays the groundwork for something quite dramatic.
The intellectual sands within the economic profession have rapidly shifted. Many think Ms Yellen’s idea is far too modest. Some propose new variations on transaction taxes, such as a levy on all share price values or on digital activity.
Resistance should be straightforward for Ms Yellen to overcome. The private economy is benefiting from the second mass mobilisation of resources to stabilise and recapitalise the economy in less than 11 years.
When the finance ministers of the International Monetary Fund and World Bank met recently, Washington proposed a global plan for uniform rates. The kicker is that countries would be able to apply the taxes if earnings in other states were taxed at a lower rate to make up the difference. That would effectively reduce incentives for US corporates to shift profits to low-tax nations that have prioritised development over government revenues.
Some developed countries have already responded to the pandemic by reversing the trend towards lowering corporation taxes, such as the UK. The 37 members of the Organisation for Economic Co-operation and Development are looking to seal a deal on a digital services tax and corporate taxes by the middle of this year.
International agreement is necessary because the existing cross-border taxation treaties only allow countries to impose taxes on businesses with a permanent presence in their borders. This allows plenty of booking of revenues or profits offshore, effectively eliminating the taxman.
The signing of the Bretton Woods Agreements in July 1944. The Bretton Woods era and the Marshall Plan set the stage for the post-Second World War economic order. Getty Images
European countries have been embroiled in a tariff war with the US over their attempts to impose Digital Sales Taxes on companies. Washington believes these discriminate against the mighty US presence in the sector.
Abandoning this approach would not have any great cost for the Europeans, as the digital taxes imposed so far have not raised much revenue for governments. In a report last week, the Centre for European Reform said “a deal broadly around the current US proposal is a realistic possibility and is in the EU’s interest”.
The direction of travel is moving to a burden-sharing ethos by taking from privately held wealth to the governments.
A study by Emmanuel Saez and Gabriel Zucman, who work at University of California in Berkeley, calls on companies to pay 0.2 per cent of stock market valuation in taxes. "As the G20 stock market capitalisation is around $90tn, the tax would raise approximately $180 billion each year," their report said. That is, of course, puny compared to the $2tn infrastructure proposal Mr Biden is pushing in the US alone.
French economist Thomas Piketty has called for a historic set of payments between colonial exploiters and the developed countries.. Alamy
The direction of travel is moving to a burden-sharing ethos by taking from privately held wealth to the governments
Thomas Piketty, the leftist French economist, asks why not also look at making a historic set of payments between colonial exploiters and the developed countries. This healing gesture would chime with those who have protested outside institutions and businesses with ties to slavery and other global ills.
The godfather of "social tax justice" sees much greater challenges ahead. He sees the benefits of tax reforms accruing in developed countries and cutting out the developing nations. Using a case study of Haiti, Mr Piketty wants Paris to hand over 300 per cent of that country’s GDP, or $30bn. Such a sum is one per cent of French public debt but would make a massive difference to the stricken Caribbean country’s outlook.
He argues that inequality of wealth and poverty must be addressed on an international basis and within countries.
Government spending is a means of intervening against these trends. By internationalising the issue, Washington would give new respectability to a much greater rebalancing of the global wealth scales.
Damien McElroy is the London bureau chief at The National
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
From Dubai-based clinical psychologist Daniella Salazar:
1. Solitary Play: This is where Infants and toddlers start to play on their own without seeming to notice the people around them. This is the beginning of play.
2. Onlooker play: This occurs where the toddler enjoys watching other people play. There doesn’t necessarily need to be any effort to begin play. They are learning how to imitate behaviours from others. This type of play may also appear in children who are more shy and introverted.
3. Parallel Play: This generally starts when children begin playing side-by-side without any interaction. Even though they aren’t physically interacting they are paying attention to each other. This is the beginning of the desire to be with other children.
4. Associative Play: At around age four or five, children become more interested in each other than in toys and begin to interact more. In this stage children start asking questions and talking about the different activities they are engaging in. They realise they have similar goals in play such as building a tower or playing with cars.
5. Social Play: In this stage children are starting to socialise more. They begin to share ideas and follow certain rules in a game. They slowly learn the definition of teamwork. They get to engage in basic social skills and interests begin to lead social interactions.
The Owo building is 14 storeys high, seven of which are below ground, with the 30,000 square feet of amenities located subterranean, including a 16-seat private cinema, seven lounges, a gym, games room, treatment suites and bicycle storage.
A clear distinction between the residences and the Raffles hotel with the amenities operated separately.
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
At the start of Russia's invasion, IEA member countries held 1.5 billion barrels in public reserves and about 575 million barrels under obligations with industry, according to the agency's website. The two collective actions of the IEA this year of 62.7 million barrels, which was agreed on March 1, and this week's 120 million barrels amount to 9 per cent of total emergency reserves, it added.
Results:
Men’s wheelchair 200m T34: 1. Walid Ktila (TUN) 27.14; 2. Mohammed Al Hammadi (UAE) 27.81; 3. Rheed McCracken (AUS) 27.81.
