Red Tape and Politics
Americans complain liberally about bureaucracy and the procedures required by the rule of the "game" like they complain about taxes. Students of comparative politics should know that the bureaucratic rules in the USA and they taxes they pay are much less onerous than the rules and taxes in most other countries.
Tax Center Briefing Book
The high cost of red tape in Nigeria
MANY Nigerians may see building a hotel as an easy way to launder money. For legitimate entrepreneurs, however, running a hotel is far from cheap or simple. In Abuja, the capital, it is rather like erecting a sign that says: “Tax me”. In fact, erecting such a sign would result in city and local taxes of about 80,000 naira ($221) a year.
One Abuja hotelier recorded no fewer than 20 bills for various annual fees, taxes and licences. They range from a 5m-naira charge from the city council for having a car park, to demands from two different agencies for putting a logo on a company car. The hotelier has also been issued with bills for four different types of property tax and a bicycle/cart licence, despite having neither a bicycle nor a cart. Although he is challenging some of the notices in court, it is often safer to pay up and avoid facing the policemen that bureaucrats send to enforce payment on the spot. “It’s a racket …like in the mafia movies,” he says…
It is possible for the well-connected to pay bribes rather than taxes, says the Abuja hotelier. But those who do risk being presented with a backlog of bills if an election puts a new set of officials in charge…
There are a number of reasons for Nigeria’s impenetrable thicket of red tape. The first is the low price of oil, which once accounted for as much as 90% of government revenues. When less money is being doled out [by the national government] to state and local administrations, bureaucrats invent new charges.
The main reason, however, is Nigeria’s political system. The “patronage economy” encourages legislators to create ever more government agencies which they can use to provide jobs to pals, says Cheta Nwanze of SBM Intelligence, a research firm… One local newspaper found that the national parliament was in the process of creating 25 new federal agencies. Among them was a National Council for Research and Development, a National Research and Innovation Foundation, a National Research and Innovation Council and Federal Entrepreneurship Centres across the country. As if that were not enough, it is also creating a Chartered Institute for Entrepreneurs. Many will no doubt start issuing licences and permits to any firm in sight…
The result of all this regulation is that businesses stay small and, where possible, in the shadows. In 2013 the National Bureau of Statistics found that Nigeria has nearly 37m firms employing fewer than ten people (most of them unregistered sole traders). Just 4,670 employed 50-199 staff…
Reformers are trying to snip away at the tangle. Yemi Osinbajo, the vice-president, issued a series of executive orders in May in an effort to move Nigeria up a few notches on the World Bank’s ease of doing business index. It currently ranks 169th out of 190, putting it behind countries such as Iraq and Sudan…
In 2011 a report commissioned by the then-president, Goodluck Jonathan, recommended cutting the number of federal agencies from 263 to 161. Since then, however, the number has kept growing.
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Labels: bureaucracy, Nigeria, taxes
Taxes, taxes, taxes
Politicians frequently argue for lower taxes based on comparisons that, they claim, show citizens in their country pay more than citizens in other countries. It came up in the recent British election campaign. Here's a good analysis (details of the comparisons are in the article).
Tax on test: do Britons pay more than most?
A comparison of personal tax rates across Europe, Australia and the US by Guardian Money reveals how average earners in Britain on salaries of £25,000, or “middle-class” individuals on £40,000, enjoy among the lowest personal tax rates of the advanced countries, while high earners on £100,000 see less of their income taken in tax than almost anywhere else in Europe.
Our survey found that someone earning £100,000 in the UK in effect loses about 34.3% of their pay to HM Revenue & Customs once personal allowances, income tax and national insurance are taken into account. The one-third reduction is roughly the same as the US, Australia and Spain, but a long way behind the 38% in Germany, 41% in Ireland, 45% in Sweden and up to 59% in France (though the French figures include very large pension contributions).
Note that these figures are a rough guide only. International tax comparisons are bedevilled by large numbers of factors…
Some countries, such as the US, raise relatively large revenues from property taxes. Others squeeze revenue from sales taxes – 25% in Sweden, 19% in Germany. While there is some harmonisation of income tax rates, social security varies dramatically. Australia imposes a small medical levy of 2%. France’s charges can be as high as 30%…
EU officials may look forward to the day when the single currency is teamed up with a single tax policy. But what emerges from our survey is how elaborate each country’s tax and social security systems are. Britain’s actually looks relatively simple compared with France’s…
Higher earners [in the UK] pay income and social security taxes that are on a par with the US, Australia and Spain, but which are much less than those in France, Sweden and Ireland.
VAT, levied at a standard rate of 20%, is towards the lower end of sales tax rates across the EU, though council taxes are relatively high by comparison…
Teaching Comparative blog entries are indexed. Use the search box to look for country names or concept labels attached to each entry.
Just The Facts! 2nd edition is a concise guide to concepts, terminology, and examples that will appear on May's exam.
Just The Facts! is available. Order HERE.
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Labels: concepts, taxes
Licenses for your car, your motorcycle, your bike, and your television. Television!??
If you marvel at the productions of the BBC, you ought to marvel at the license fee for televisions in the UK.
HEADLINE
The UK's annual television licence fee is to rise to £147 from £145.50 [$182], the government has announced.
The increase, which will come into effect on 1 April, marks the the first rise in the licence fee since 2010…
Last year, the government announced that it would rise in line with inflation from April 2017 for the next five years.
The Government is responsible for setting the level of the licence fee, which covers all BBC services and contributes to the costs of rolling out broadband to the UK population.
It also helps to fund the Welsh Language TV channel S4C and local TV channels…
Licence fee payers will receive a payment plan or a reminder reflecting the new amount when their licence is next due for renewal, the BBC said in a statement.
Those buying or renewing a licence after 1 April will pay the new fee.
Those already buying a licence on an instalment scheme which started before 1 April will continue to make payments totalling £145.50 until their licence comes up for renewal…
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Just The Facts! 2nd edition is a concise guide to concepts, terminology, and examples that will appear on May's exam.
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Labels: infrastructure, taxes, UK
Budgets, not just for households
The US government budget is not the only one being debated these days. In the UK, budget makers are looking forward to more austerity. And what are the alternatives?
Government looks for new spending cuts of up to 6%
Government departments have been told to find spending cuts of up to 6% as part of plans to save £3.5bn by 2020…
Treasury… said the NHS and core schools budgets would not be included, with savings found by councils to be spent on under-pressure social services…
Departments have already faced significant cuts in their budgets since 2010, but they will now be told to find further savings of between 2% and 6% by 2019-20, the Treasury said, with up to £1bn to be reinvested in "priority areas"…
 |
| McDonnell |
[S]hadow chancellor John McDonnell said further cuts would put councils in an impossible position and "it was difficult to see" how they would maintain services.
With interest rates so low, he said there was an "overwhelming case" for government to borrow to fund spending on infrastructure, such as roads, rail and broadband.
"The government has said schools and hospitals are going to be protected. That is simply not true. The NHS is suffering the biggest crisis since its foundation and schools are having the first budget cut per head since the 1970s… "
Public spending as a share of GDP has fallen steadily since 2010 when it totalled 45%. This year's figure is forecast to be 40%…
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| Chancellor Hammond |
But ahead of his first Budget on 8 March, Mr Hammond is under pressure to increase spending on a number of fronts amid signs that stronger-than-expected tax receipts could give him additional room for manoeuvre…
Conservative MP Sarah Wollaston said the effects of an ageing society, on top of underlying financial pressures, were creating a "perfect storm" for the health service.
She said the NHS needed a cash "lifeline" in the Budget and that plugging gaps in day-to-day spending by re-allocating capital spending was a "false economy".
The government is being warned that a further dose of austerity, without better financial planning and reform, could push some public services to "breaking point"…
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Labels: economy, policy, taxes, UK
Comparative taxation
There are arguments in the USA over the proper level of taxation, but most Americans have only a vague idea of how taxes in this country compare with taxes in other countries.
Here is how income and national sales taxes in the the AP6 compare to those taxes in the USA. If you're not familiar with value added taxes,VAT, they are basically national sales taxes.
Country Income Taxes Social Security Taxes VAT
Corporate Individual Employer Employee
China 25% 3-45% 30% 11% 17%
Iran 15-35% 10-35% ( 15-35% ) 0-9%
Mexico 30% 0-30% 7% 2% 16%
Nigeria 30% 7-24% ( none ) 5%
Russia 20% 13% 30% 0% 18%
UK 20% 0-45% 13.8% 12% 20%
USA 15-35% 0-39% 7.65% 5.65% 0%
What policy differences would you predict from these numbers? What political issues would you expect to be argued over taxes in each nation?
Labels: concepts, taxes
Just The Facts! 2nd edition is a concise guide to concepts, terminology, and examples that will appear on May's exam.
