Britain is accelerating preparations for “all eventualities” when it leaves the European Union, but both sides are hopeful an agreement on stepping up talks to unravel more than 40 years of partnership will be sealed soon.
With only 17 months remaining until Britain’s expected departure, the slow pace of talks has increased the possibility that London will leave without a deal, alarming business leaders who say time is running out for them to make investment decisions.
British and EU negotiators met in Brussels on Tuesday to try to agree a schedule for further divorce talks, with an initial proposal from the bloc to hold three more rounds before the end of the year not winning instant approval from London.
The pressure has spurred the British government to step up its Brexit plans, employing thousands more workers and spending millions to make sure customs posts, laws and systems work on day one of Brexit, even without a deal on a future relationship.
At a meeting with her ministers Tuesday, Prime Minister Theresa May was updated on plans for the tax and customs authority to add 3,000 to 5,000 workers next year and for spending of 500 million pounds ($660.45 million) for Brexit.
“Alongside the negotiations in Brussels, it is crucial that we are putting our own domestic preparations in place so that we are ready at the point that we leave the EU,” May’s spokesman told reporters.
“The preparatory work has seen a significant acceleration in recent months. Departments are preparing detailed delivery plans for each of the around 300 programs underway across government.”
May wants to silence critics in her ruling Conservative Party who are pressing her to walk away from talks, which have faltered over how much Britain should pay to leave the bloc.
Brexit campaigners are demanding that Britain leave with no deal if the talks do not move on beyond a discussion of the divorce settlement on a so-called Brexit bill, EU citizens rights and the border with EU member Ireland by December.
Brexit minister David Davis said Tuesday that he thought Britain would agree on some kind of basic deal with the European Union, even in the “very improbable” eventuality that they failed to agree on a trade deal.
In a sign that an improved tone between the two sides, struck at a summit earlier this month, was continuing, EU chief negotiator Michel Barnier reaffirmed his message in the Slovak capital, Bratislava, that he was ready to “speed up negotiations.”
May’s government has also long said it would welcome an acceleration in the talks. But the sides have yet to agree on how to do that following a top-level meeting in Brussels on October 19-20.
Barnier has proposed three rounds — one that did not take place last week, and two more in the weeks starting November 16 and December 4. London prefers continuous talks.
“We are ready to accelerate, but we must have something to talk about,” said an EU official.
This was what Britain’s Oliver Robbins and Barnier’s deputy, Sabine Weyand, were seeking to agree on in Brussels on Tuesday.
Before leaving the EU, May faces a struggle to get parliamentary support for a law to sever political, financial and legal ties with the bloc — the EU Withdrawal Bill, for which lawmakers have proposed hundreds of amendments.
Asked whether May was preparing to offer a concession over a final vote on any deal struck with the EU, her spokesman said there was “lots of speculation in relation to Brexit.”
“We’ve always said that we’ll do whatever is necessary,” he said.
Mexico announced Tuesday that its economy shrank 0.2 percent in the third quarter compared with the previous period amid uncertainty related to renegotiations of the North American Free Trade Agreement and local slowdowns caused by natural disasters.
Alfredo Coutino, Latin America director at Moody’s Analytics, said the contraction came after Mexico posted GDP gains of 0.7 percent and 0.6 percent in the first two quarters and confirms an expected deceleration in the second half of 2017.
“Investment decisions were affected by uncertainty over the possibility that NAFTA negotiations would break off,” Coutino wrote in a report. He added that monetary tightening and high inflation “restrained consumption,” while “activity was partially interrupted in cities affected by the two earthquakes in September and the hurricanes that struck the southern part of the country.”
The government’s National Institute of Statistics and Geography reported the contraction and said that GDP for the third quarter was 1.7 percent higher than in the same period last year.
Coutino forecast that Mexico’s economy will grow about 1 percent in the fourth quarter and hit about 1.8 percent on the year, down from 2017 and short of target.your ad here
ExxonMobil has promised to upgrade pollution controls at eight of its manufacturing facilities along the U.S. Gulf Coast under an agreement it reached with federal authorities.
The petrochemical giant will spend about $300 million to install pollution controls at the plants to settle allegations that it violated U.S. environmental law by failing to properly monitor industrial flares at its petrochemical plants, resulting in illegal air pollution.
The U.S. Justice Department, in a statement, said the Exxon facilities — located in Louisiana and Texas — will operate new air pollution control and monitoring technology to reduce the harmful emissions.
“Once fully implemented, the pollution controls required by the settlement are estimated to reduce harmful air emissions of volatile organic compounds (VOCs) by more than 7,000 tons per year,” the DOJ said in a statement. “The settlement is also expected to reduce toxic air pollutants, including benzene, by more than 1,500 tons per year.”
The Justice Department describes VOCs as key components in the formation of smog, which can irritate lungs and inflame respiratory issues like asthma. Chronic exposure can lead to leukemia and adverse reproductive effects in women, the DOJ said.
Exxon also will be required to spend $1 million on a project to plant trees in Baytown, Texas, and purchase a $1.5 million mobile air quality monitoring vehicle for use by Louisiana’s environmental protection agency.
The co-owner of a Fifth Avenue skyscraper controlled by the family of Jared Kushner says demolishing the tower to build luxury apartments is not practical and the building will likely remain as offices.
Vornado Realty Trust CEO Steven Roth told investors on Tuesday that the Kushner family’s plan to raise billions from investors to rebuild the tower is “not feasible.” He added that “it’s likely that the building will revert to an office building.”
The project drew criticism after media reports that the Kushner Cos. was negotiating with a Chinese insurer with ties to the ruling Communist Party, among other big foreign investors. Critics say such deals would raise conflicts of interest issues with Jared Kushner serving in the White House as an adviser to his father-in-law, President Donald Trump.your ad here
Україна поліпшила свої позиції в рейтингу легкості ведення бізнесу за версією Світового банку Doing Business на чотири позиції і піднялася на 76-е місце із загалом 190. Щорічний рейтинг був оприлюднений 31 жовтня.
Україна опинилася між Бутаном (75-е) і Киргизстаном (77-е місце).
За даними експертів Світового банку, Україна продемонструвала зростання, зокрема, за такими пунктами: «отримання дозволів на будівництво», «захист міноритарних інвесторів» і «сплата податків». Загалом рейтинг Світового банку складається за 10 критеріями.
Минулого року Україна посіла 80-е місце в рейтингу, піднявшись на три позиції порівняно з попереднім роком.
Очолюють нинішній рейтинг Нова Зеландія, Сінгапур, Данія, на останніх місцях – Венесуела, Еритрея, Сомалі.
Росія в нинішньому рейтингу піднялася на 35-у позицію.
Мінекономрозвитку раніше прогнозувало, що Україна може піднятися в рейтингу легкості ведення бізнесу від Світового банку Doing Business 2018 на 10 позицій – до 70-го місця, що потенційно може приносити до країни щороку додатково мільярд доларів інвестицій.
Раніше про те, що Україна піднялась у рейтингу Doing Business, заявляв президент Петро Порошенко.
Official figures show that the robust economic recovery across the 19-country eurozone persisted during the third quarter, helping unemployment fall to a near 9-year low.
Eurostat, the European Union’s statistics agency, said Tuesday that the eurozone economy grew by 0.6 percent during the July to September period. Though that’s slightly down on the stellar 0.7 percent tick recorded in the second quarter, it’s modestly higher than expectations for a 0.5 percent rise.
Separately, Eurostat said unemployment fell to 8.9 percent in September from 9.0 percent the previous month. That’s the lowest rate since January 2009.
Elsewhere, Eurostat said annual inflation in the eurozone dipped to 1.4 percent in October from 1.5 percent as the core rate, which strips out volatile items, surprisingly fell to 0.9 percent from 1.1 percent.
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Hundreds of drivers for the internet based ride-hailing firm Uber drove through Brazil’s largest cities on Monday to protest legislation that would turn them into regular taxi drivers subject to the same local licensing and taxation rules.
The chief executive of Uber Technologies Inc, Dara Khosrowshahi, arrived in Brazil to lobby against the bill that is due to be voted on by the Senate on Tuesday and which threatens the company’s business in a fast-growing foreign market.
Brazil is Uber’s third-largest market, with 17 million users, and the city of Sao Paulo sees more trips on the ride-hailing service than any other city in the world, ahead of New York and Mexico City, according to the company.
A spokesman for the company said the application as it exists could not operate under the new rules, including the use of a taxi license plate on cars owned by Uber drivers.
“The business model we have today would not longer be viable,” Uber’s executive spokesman in Brazil Fabio Sabba told Reuters.
Uber is already battling to keep operating in London after the city’s transport regulator deemed it unfit to run a taxi service and refused to renew its license.
Police said 800 Uber drivers drove through the center of Brazil’s capital Brasilia to protest the bill that many say will put them out of business. Similar protests in Sao Paulo and Rio de Janeiro snarled downtown traffic.
Uber did not organize the drivers’ protests but alerted authorities that they would happen.
“The bill will create so much bureaucracy that it prevents the 500,000 drivers in Brazil from earning income for their families,” Uber said in a statement.
Uber said it has paid 495 million reais ($150 million) in federal and municipal taxes so far this year.
The bill, which has already been approved by the lower house of Congress, would define ride hailing applications as public transport instead of private services and require drivers to get a special permit from city authorities. It would also establish additional regulations and taxes.
If the Senate votes to approve the bill, it will be up to President Michel Temer to sign or veto the legislation or parts of it.
Argentina’s President Mauricio Macri vowed to press ahead with reforms to the country’s tax, labor and retirement systems in a speech on Monday, a week after his “Let’s Change” coalition swept to victory at the polls in midterm elections.
The government will present a tax reform proposal this Tuesday or Wednesday, and an amnesty plan for companies that hired workers informally in the coming days, Macri said. He added that the government would convene a commission to propose changes to the retirement system in coming weeks.
The speech marked a roadmap for the second half of Macri’s four-year term, as he seeks to implement business-friendly reforms to attract investors who avoided the country during more than a decade of populist rule.
“We need lower taxes, more public works, and all this we need to achieve with fiscal balance,” Macri told a gathering of lawmakers, governors, union leaders, judges and others.
Investors have been encouraged by the reforms Macri has implemented since taking office in December 2015, including lifting foreign exchange controls, settling with holdout creditors, and lowering export taxes.
But significant investment has not arrived. Companies have demanded lower costs, while credit agencies are concerned about a deep fiscal deficit.
Macri’s coalition swept the five most populous areas in midterm elections, giving him a broader mandate to pass reforms, though it still lacks majorities in both chambers of Congress.
Macri said his government had reduced the country’s tax burden, and wanted to make the system “simpler, clearer, and fairer.”
He reiterated the government’s aim of slashing Argentina’s fiscal deficit by one percentage point of gross domestic product per year.
And he also vowed to reform the country’s retirement system, a large driver of government spending.
“We need to start a mature and honest conversation about our retirement and pension system,” Macri said. “Our retirement system hides serious inequities, and it is not sustainable.”
While Macri has said he does not plan major changes to the country’s labor code, he has said the government plans to provide incentives to companies to formalize undeclared workers and work with unions in specific sectors to lower costs.
Macri also pledged reforms to the country’s justice system to combat corruption. Cabinet Chief Marcos Pena told journalists that the resignation on Monday of chief prosecutor Alejandra Gils Carbo, appointed during the former administration of President Cristina Fernandez, was a step towards making the judiciary more independent.
The African Development Bank has called off a loan to Nigeria that would have helped fund the country’s budget, instead redirecting the money to specific projects, a vice president at the lender said on Monday.
The African Development Bank had been in talks with Nigeria for around a year to release the second, $400 million tranche of a $1 billion loan to shore up its budget for 2017, as the government tried to reinvigorate its stagnant economy with heavy spending.
But Nigeria refused to meet the terms of international lenders, which also included the World Bank, to enact various reforms, including allowing its currency, the naira, to float freely on the foreign exchange market.
Rather than loan Nigeria money to fund its budget, the African Development Bank is likely to take at least some of that money and “put it directly into projects,” Amadou Hott, African Development Bank vice president for power, energy, climate change and green growth, told Reuters in an interview during a Nordic-African business conference in Oslo.
Because prices for oil, on which Nigeria’s government relies for about two-thirds of its revenues, have risen and the naira-dollar exchange rate has improved, the country is relying less than expected on external borrowing, Hott said.
No one from the Nigerian finance ministry was immediately available to comment.
Nigeria’s 2017 budget, 7.44 trillion naira, is just one in a series of record budgets that the government has faced obstacles funding, pushing it to seek loans from overseas.
In late 2016, the AfDB agreed to lend Nigeria a first tranche of $600 million out of $1 billion. But negotiations over economic reform later bogged down, blocking attempts to secure the second tranche of $400 million, sources told Reuters then.
Now, AfDB’s loans will be more targeted, Hott said.
“It’s hundreds of millions of dollars, just in one go, that we were supposed to provide in budget support, but we will move into real projects … ” he said.
Earlier this month, the head of Nigeria’s Debt Management Office said the country is still in talks with the World Bank for a $1.6 billion loan, which will help plug part of an expected $7.5 billion deficit for 2017.
The administration is also trying to restructure its debt to move away from high-interest, naira-denominated loans and towards dollar loans, which carry lower rates.
U.S. President is expected to nominate Federal Reserve Governor Jerome Powell as the next chairman of the central bank, senior administration officials said Monday.
Powell is a Republican centrist who appears inclined to continue the Fed’s strategy of gradual interest rate hikes.
But officials say Trump hasn’t made up his mind and could change it.
Powell would represent a middle-ground pick for Trump, who is also considering current Democratic Fed Chair Janet Yellen as well as Stanford University economist John Taylor and former Fed Governor Kevin Warsh.
Powell could, however, relax some of the stricter financial rules that were enacted after the 2008 financial crisis. Trump has complained that those rules have been too restrictive.
The decision over the Fed’s next leader is overshadowing this week’s meeting of the Federal Reserve’s policy meeting.
Trump said Friday he has “someone very specific in mind” for the Fed. “It will be a person who, hopefully, will do a fantastic job,” Trump said in a short video message posted on Instagram and Twitter.
Many conservative members of Congress had been pushing Trump to select Taylor, rather than Powell, for Fed chairman. Taylor, one of the country’s leading academics in the area of Fed policy, would likely embrace a more “hawkish” approach — more inclined to raise rates to fight inflation than to keep rates low to support the job market. Taylor is the author of a widely cited policy rule that provides a mathematical formula for guiding rate decisions. By one version of that rule, rates would be at least double what they are now.
Yellen, who was selected as Fed chair by President Barack Obama, has been an outspoken advocate for the stricter financial regulations that took effect in 2010 to prevent another crisis.
Imagine you could swipe your phone over a piece of fish in the supermarket and instantly see secure records of its entire path through the supply chain, from the technique used by the fisherman who caught it in Indonesia to when it was shipped and how it was processed at a factory in your home country — all at the tap of a smartphone.
Trial projects such as that one are testing the potential of Blockchain technology to bring transparency to all sorts of notoriously inefficient or shadowy industries in Southeast Asia.
Blockchain, the technology that powers bitcoin, is an essentially unchangeable form of bookkeeping. It creates cryptographically chained signatures between blocks of information that are authenticated by users over a peer-to-peer distributed ledger — a public record that can be applied to any type of bookkeeping, not just cryptocurrencies.
“It removes the requirement for a centralized authority, and in a lot of the products that it’s being launched in, this centralized authority tends to be the government,” said Alisa DiCaprio, head of research at R3 — an enterprise banking software firm that uses distributed ledger technology.
In a region where the most important records — identity and ownership for instance — are often subjected to little or no external oversight, blockchain offers enormous potential benefits.
Erin Murphy, Founder and Principal of Inle Advisory Group, a Myanmar and emerging business advisory firm, said major Asian business hubs are looking to blockchain to clean up and simplify transactions.
“Ideally, we would want to see adoption of blockchain at an official level all across the region,” she said in an email. “But perhaps not surprisingly, the governments that are leading blockchain adoption are those that are already low-corruption.”
One of those governments, she said, is Singapore, which is working with major banks on a blockchain-based system to streamline and qualitatively improve their customer (KYC) processes.
In other countries, it is being used for completely different purposes. In the Philippines, a remittance market worth billions of dollars per month has been invaded by firms offering cheaper services built on blockchain, which people can access without a bank account..
“Any steps that get taken at first may not be viewed through an anti-corruption lens and may inadvertently tackle that issue; it will likely be viewed through a development lens to kickstart poverty alleviation and bringing sectors up to international standards that attract foreign investment,” Murphy said.
More than money
There are many trials with clear utility in Southeast Asia underway, including systems for land titling under development in Sweden and Japan.
In June, the United Nations unveiled a blockchain-based system built in partnership with Microsoft and Accenture that gives stateless refugees a permanent identity based on biometric data.
It’s also being explored for secure voting systems.
The blockchain-based app developed to track the supply chain of fish from Indonesia — Provenance — is now the basis of many other trials, including a project to create a similar system for the garment industry.
Online you can view the results of a pilot released in May this year that follows a piece of clothing — an Alpaca Mirror Jumper from London-based designer Martine Jarlgaard, from a farm in Dulverton, Britain, through every step of production into London with location, content and timestamps.
It is a long way, though, from realizing that something can be done to actually making it happen, DiCaprio of R3 said.
“The technical capability to do this exists in most developing countries,” she said. “You have engineers who can code on the blockchain. But the understanding of how to actually implement this from a business point of view is very poor.”
DiCaprio estimates it will take about five years before we actually see large-scale functioning applications and believes the most impactful will occur at the macro economic level.
“So for example one area that it’s moving very quickly is trade finance,” she said. “And trade finance, you’re generally talking about fairly large companies, generally in Asia mostly exporting or importing from or to the US or EU,.”
Faster, cheaper and more transparent transactions combined with reductions in the risks of lending and borrowing would flow to down to the village level, she added.
Subversion vs centralization
Blockchain proponents are divided by some sharply divergent values. Some see blockchain — whose slogan is “be your own bank,” as technology that can fundamentally upend a global financial system they believe is intractably corrupt.
“There is a serious opportunity for us here to remove money out of government,” said a Southeast Asia based bitcoin trader who would only give his alias FlippingABitCoin, fearing he could expose himself to physical theft.
Billions of people currently excluded from the formal banking system will be able to access global cryptocurrencies with no middle man using nothing more than a phone, he said.
“It will level out the playing field of power,” he said.
Another group of enthusiasts are encouraging the absorption of this technology by states, as demonstrated by Canada, Singapore, China and Germany, all of which are either exploring or conducting trials of their own central bank digital currencies using blockchain.
“In the long run, we believe if there is any threat at all to governments, it is that other governments will lead the way in adopting blockchain technologies in producing low-corruption, high-transparency, highly-secure digitized economic infrastructures that will attract business, investment and stakeholder confidence,” wrote Michael Hsieh, a non-resident affiliate at the Center for International Security and Cooperation at Stanford University, in an email.
“The societies who lead in the great fintech [financial technology] innovation race of the 21st century will siphon all the capital and productivity from those that lag,” he wrote.
Opening a new trade route to Afghanistan that bypasses Pakistan, India has dispatched its first consignment of wheat to the war torn country via the Iranian port of Chabahar.
The strategic sea route is a significant step in bolstering trade with Kabul that has been hampered because rival Pakistan does not allow India to transport goods to Afghanistan through its territory.
After the shipment was seen off by Indian Foreign Minister Sushma Swaraj and her Afghan counterpart Salahuddin Rabbani via a joint video conference Sunday, the Indian government called it a “landmark moment.”
In the coming months, six more consignments of wheat totaling 1.1. million tons will be sent from India’s western port of Kandla to Chabahar. From the Iranian port it will be taken by road to Kabul.
The shipment comes days after U.S. Secretary of State Rex Tillerson, on a visit to New Delhi, allayed concerns that the Trump administration’s tough stand on Iran could pose a fresh stumbling block to India’s plans to develop the strategic Iranian port as a regional transit hub.
Easier connectivity to Afghanistan is key for India to step up its economic engagement with Kabul, which Washington has called for as part of its new policy to stabilize the war torn country.
And Chabahar port, in which India is investing $500 million to build new terminals, cargo berths and connecting road and rail lines, is the centerpiece of the strategy to improve linkages not just with Afghanistan, but also to resource-rich Central Asian republics.
“This is the first time that we are getting into Afghanistan through a route different than what traditional routes have been,” said South Asia expert Sukh Deo Muni at New Delhi’s Institute of Defense Studies and Analyses.
Indian leaders expressed optimism about the project, which is still a work in progress. Minister Swaraj called it the starting point of a journey that would spur the unhindered flow of commerce and trade throughout the region. Prime Minister Narendra Modi tweeted the launch of the trade route, “marks a new chapter in regional cooperation & connectivity.”
The sea route via the Iranian port is the second step taken by India to increase connectivity with Kabul. In June it opened an air freight corridor to provide greater access for Afghan goods to the Indian market.
The Chabahar port is seen as India’s answer to the Gwadar port in Pakistan being developed by China.
The project was conceived almost 15 years ago, but the plans were stalled for years due to U.S. led international sanctions on Iran. Their easing prompted India to sign a trilateral pact with Iran and Afghanistan last year to develop the port.
U.S. Secretary of State Tillerson indicated in New Delhi last week that fresh sanctions on Iran by the Trump administration would not pose a stumbling block to those plans.
“It is not our objective to harm the Iranian people, nor is it our objective to interfere with legitimate business activities that are going on with other businesses, whether they be from Europe, India or agreements that are in place that promote economic development and activity to the benefit of our friends and allies as well. We think there is no contradiction within that policy,” he told reporters in India.
Those words have been welcomed in New Delhi said analyst Muni. “I think there is a far more reassuring feeling in India vis-a-vis the Trump administration than what the initial thought was,” he said.
The shortest and most cost effective land routes between India and Afghanistan lie through Pakistan. However, due to longstanding rivalries between the two countries, India is not allowed to send any exports through Pakistani territory and Afghanistan is only allowed to send a limited amount of perishable goods through Pakistani territory to India.your ad here
Загальний державний і гарантований державою борг України у вересні 2017 року зріс на 0,47 мільярда доларів (на 0,62 %) – до 77,03 мільярдів доларів США. Про це свідчать статистичні дані, оприлюднені Міністерством фінансів.
У гривневому еквіваленті державний борг за цей період зріс на 84,66 мільярда гривень – до 2,043 трильйона гривень.
За даними Мінфіну, з початку року – за січень-вересень – державний і гарантований державою борг зріс на 8,5% у доларовому еквіваленті, на 5,85% – у гривневому еквіваленті.
Станом на 30 вересня гарантований державою борг становив 12 мільярдів доларів (318,31 мільярда гривень).
Згідно з Бюджетний кодексом, державний борг – загальна сума боргових зобов’язань держави з повернення отриманих та непогашених кредитів (позик), що виникають внаслідок державного запозичення.
Кабінет міністрів вніс до парламенту проект закону про держбюджет 15 вересня – в останній день, коли згідно з Бюджетним кодексом, мав це зробити. Документ, зокрема, передбачає доходи бюджету на наступний рік у сумі понад 877 мільярдів гривень, видатки – більш ніж 948 мільярдів гривень. Згідно із розрахунками загальний обсяг державного боргу, обрахований у національній валюті, у 2018 складе 1,9 трильйона гривень.
President Donald Trump’s plan for overhauling the U.S. tax system faced growing opposition from interest groups on Sunday, as Republicans prepare to unveil sweeping legislation that could eliminate some of the most popular tax breaks to help pay for lower taxes.
Republicans who control the U.S. House of Representatives will not reveal their bill until Wednesday. But the National Association of Home Builders, a powerful housing industry trade group, is already vowing to defeat it over a change for home mortgage deductions, while Republican leaders try to head off opposition to possible changes to individual retirement savings and state and local tax payments.
Trump and Republicans have vowed to enact tax reform this year for the first time since 1986. But the plan to deliver up to $6 trillion in tax cuts for businesses and individuals faces challenges even from rank-and-file House Republicans.
House and Senate Republicans are on a fast-track to pass separate tax bills before the Nov. 23 U.S. Thanksgiving holiday, iron out differences in December, send a final version to Trump’s desk before January and ultimately hand the president his first major legislative victory. Analysts say there is a good chance the tax overhaul will be delayed until next year.
The NAHB, which boasts 130,000 member firms employing 9 million workers, says the bill would harm U.S. home prices by marginalizing the value of mortgage interest deductions as an incentive for buying homes. The trade group wants legislation to offer a $5,500 tax credit but says it was rebuffed by House Republican leaders.
“We’re opposed to the tax bill without the tax credit in there, and we’ll be working very aggressively to see it defeated,” NAHB chief executive Jerry Howard told Reuters.
Republicans warned that the Trump tax plan is entering a new and difficult phase as lobbyists ramp up pressure on lawmakers to spare their pet tax breaks.
“When groups start rallying against things and they succeed, everything starts unraveling,” Senator Bob Corker, a leading Republican fiscal hawk, told CBS’ Face the Nation.
Anxiety in high-tax states
One of the biggest challenges involves a proposal to eliminate the federal deduction for state and local taxes (SALT), which analysts say would hit upper middle-class families in high income tax states such as New York, New Jersey and California. The states are home to enough House Republicans to stymie legislation.
The top House Republican on tax policy gave ground over the weekend, saying he would allow a deduction for some local taxes to remain.
“We are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Committee Chairman Kevin Brady said in a statement.
But the gesture appeared to do little to turn the tide of opposition to SALT’s elimination.
“I’m not going to sign onto anything until the full package is fully analyzed by economists,” Representative Peter King of New York told the Fox News program Sunday Morning Futures. “The fact that we’re getting it at the eleventh hour raises real issues with me,” he added.
A lobby coalition representing state and local governments, realtors and public unions rejected Brady’s statement outright, saying the move would “unfairly penalize taxpayers in states that rely significantly on income taxes.”
House Republicans have also faced opposition from Trump and others after proposing to sharply curtail tax-free contributions to 401(k) programs and move retirement savings to a style of account that allows tax-free withdrawals, rather than the tax-exempt contributions that are popular with 401(k) investors.
House Republicans now say they could permit higher 401(k) contribution limits but continue to talk about tax-free withdrawals. “We will expand the amount that you can invest. But we’ll also give you an option to actually not be taxed later in life,” House Republican leader Kevin McCarthy told Fox News.
The current cap on annual 401(k) tax-free contributions is $18,000.
Corker said congressional tax committees seem to be falling short of their goal to eliminate $4 trillion in tax breaks to prevent the Trump plan from adding to the federal deficit.
“They’re having great difficulty just getting to $3.6 trillion,” said the Tennessee Republican, who has vowed to vote against tax reform if it increases a federal debt load that stands at more than $20 trillion.
Ohio’s Republican governor, John Kasich, told Fox News Sunday that spending on entitlement programs such as Medicare, Medicaid and Social Security should also be reviewed as part of the effort to pay for tax cuts.
“It may be separate from the tax bill, but it needs to happen,” Kasich said.
Xavier Gabriel can take some credit if the tiny Catalan mountain town of Sort is one of the most famous in Spain.
He runs a lottery shop called La Bruja de Oro, or The Golden Witch, in a town whose name, aptly, means “Luck” in Catalan. Its fortune in having sold many prize-winning tickets has made it a household name and a successful online business.
But the crisis surrounding Catalonia’s push for independence has changed life for 60-year-old Gabriel. He joined more than 1,500 companies in moving their official headquarters out of the wealthy region in recent weeks. Their main fear: that they would no longer be covered by Spanish and European Union laws if Catalonia manages to break away, dragging their businesses into unknown territory.
“The time had come to make a decision,” said Gabriel, who employs 16 people and describes himself as a proud Catalan.
Hedging their bets
Like Gabriel’s, the vast majority of companies that moved their headquarters didn’t transfer workers or assets, such as bank holdings or production equipment. So far, it’s mainly a form of legal insurance. But as the political crisis escalates, the risk is that companies are deferring investments and hiring. There is evidence that tourists are holding off booking, perhaps frightened by images in the media of police crackdowns, street demonstrations and strikes.
And the situation risks getting worse before it improves: the central government’s decision Friday to take control of the region could spiral out of control if there is popular resistance, whether by citizens or local authorities like the Catalan police force.
“There is absolutely no doubt that the crisis is having a very damaging effect on the economy,” said Javier Diaz Gimenez, an economics professor at Spain’s prestigious IESE Business School.
Financial markets in Spain have so far fallen only modestly, reflecting investors’ apparent belief that the tensions will eventually be resolved. The Spanish government has called a regional election in Catalonia for Dec. 21 and could later consider revisions to the constitution that might placate some of the independence supporters.
But that could take some time, Diaz Gimenez says, given how confrontational both sides have been.
The list of businesses moving headquarters includes Catalonia’s top two banks, Caixabank and Sabadell, which are among Spain’s top five lenders. Then there is the Codorniu cava sparkling wine maker for which Catalonia is famous. Another well-known cava maker, Freixenet, is also planning to follow if the independence drive continues. Publishing giant Planeta, the world’s leading Spanish-language publisher and second biggest publisher in France, has also moved its official address out of Catalonia.
Caixabank says it suffered a moderate but temporary run on deposits because of the crisis, but said it has since recovered and was adamant the move was permanent.
Shares for Caixabank, Sabadell and some other companies have been volatile, falling after the Oct. 1 vote for independence and jumping sharply when they announced their decision to move headquarters.
Tip of the iceberg
Lottery shop owner Gabriel says ticket sales this month are up nearly 300 percent over last year, a rise he attributed to popular support for his decision to move his business.
Diaz Gimenez said the decisions to move headquarters, while not immediately affecting jobs, were “just the tip of the iceberg.”
“Plans to relocate firms or invest elsewhere are going to accelerate and some of it is going to go to, say, Poland, and it’s never going to come back,” he said.
“People that were thinking about investing in Spain and Barcelona are starting to think again,” he said. “It’s not just Catalonia. It’s the mismanagement by Spain, which is proving that it’s not a serious country because it cannot solve this thing.”
Spanish economy humming
The turmoil, ironically, comes just as Spain has been enjoying some of the fastest economic growth in Europe.
Its economy, the fourth-largest in the 19-country eurozone, grew by a hefty quarterly rate of 0.9 percent in the second quarter. The government has maintained its forecast for growth in 2017 at 3.1 percent, but revised its estimate for 2018 from 2.6 percent to 2.3 percent because of the political crisis. Moody’s credit rating agency has warned that a continued political impasse and, ultimately, independence for Catalonia would severely hurt the country’s credit rating.
Billions at stake
Tourism seems to be taking the biggest hit so far.
Experts say spending in the sector in Catalonia in the first two weeks of October — that is, following the independence referendum — was down 15 percent from a year earlier.
Tourism represents about 11 percent of Spain’s 1.1-trillion euro ($1.3 trillion) gross domestic product, with Catalonia and its capital, Barcelona, providing a fifth of that, being the most popular destinations for visitors.
Exceltur, a nonprofit group formed by the 25 leading Spanish tourist groups, expects growth in tourism this year to ease from an estimated 4.1 percent to 3.1 percent.
Reservations in Barcelona alone are down 20 percent compared with last year, it said. If the trend continues in the final three months of the year, it could lead to losses of up to 1.2 billion euros ($1.41 billion) in the sector, which in turn could affect jobs.
Analysts fear that the independence movement’s stated aim of continuing to create as much social and economic chaos for Spain as possible could exacerbate the situation. The Catalan National Assembly group has been openly talking about a boycott against Spain’s top companies and major strike activity.
“Spain, its tourism, everything is very dependent on image,” Diaz Gimenez said. “And this is just killing it.”