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National Mobilization of Entrepreneurialism; Skills gaps strategy

Naseem Javed

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Uplifting midsize business economy, nation by nation  
Although neglected, the revival of midsize business economy is extremely critical, as declaration of trade-wars on others are increasingly becoming living proofs of one’s own unskilled citizenry unable to quadruple exports. More heroic are the real declarations of internal skills-wars to retrain nation’s working citizenry to stand up to global-age standards of performance, productivity and quadrupling exportability bringing in local grassroots prosperity for better harmony. Observe the restless citizenry and the brutal decline of small medium enterprises amongst developed nation. Critically needed, to catch up lost decade a generational transformation is required, such challenges demand global-age style execution and are less dependent on new funding.  So who is blocking and what’s stopping all this?

First, the driving philosophy:

So long the proof of the decimated grassroots prosperity among developed economies of the world is not required; so long the leadership accepts the calls of restless citizenry entangled on diversity and tolerance issues and growing populism. Although not be confused when cries about social justice and inequality often being bundled on ethnic and gender lines and labeled as mass populism. Very calm and very deep discussions are mandatory.   

Furthermore, to explore reality, we must acknowledge that when mankind is in trouble, only mankind’s rules will solve the issues. In searching of answers, observe how the mind is limitless and hardwired like the open universe, therefore, eliminating random routes to endless journeys, a focused mind is one of the biggest achievements of life. If the mind is a miracle of the universe, the body its natural temple, self-discovery, self-optimization and lifelong learning is where we need to start once again on a new blank page. We need focus and we need harmonious progress. 

To deploy technology in right directions and create highly productive national working citizenry compatible with global-age demands we have to fall back on mind. Civilization has always survived on these humanistic challenges with common-sense advancement principles.

Therefore, now enters an entrepreneurial mind; a product of lifelong learning, a cognizant and very capable element to handle such local, national or global tasks. Being added to the world are currently some billion new entrepreneurs in Asia, after all, it were some 100,000 entrepreneurs whom carved out the entrepreneurial supremacy of America that lasted well over a century. On productivity, performance, and supremacy of excellence our new world is zipping by the hour with no mercy for crawling nations. New speed of critical thinking and global age execution style must emerge across the nation or it will simply grind economy to halt. A lot of proof is out there

Especially, if the above national uplifting deployments and mobilizations are not new funding dependent but are rather combinations of technologically advanced global-age styles of execution dependent so now the main issue of what’s stopping all this should become the core issue.

Hidden in the differentiation with deeper understanding of “extreme-value-creation’ grassroots economies” and the “domination of ‘hologramic-debt-based economies” and this is where the future challenges are buried.

What can nations do?
During recent decades, developed economies were too slow to understand ‘soft-power-asset-management’ the art of imagining things over ‘hard-asset-centricity’ where staying deeply stuck to old routines on old factory floors is rewarded. This is like when forbidden are the bicycle makers to dream of ‘drones’ or flying cars. Some 100 millions small and large plants around the world are badly stuck in old groves of decades old mentality, unable to transform to the meaning of global-age, unable to rapidly optimize to grow to new heights with new global age thinking and execution. Imagine all that wasted potential, talent and machinery, infrastructure under dead weight of old mentality still logged into hard-assets… deeper studies are critical.

Next: A Global Revolution of Mind

Self-discovery poised to find all hidden potentials,
Self-optimization to deploy all new skills and potentials
Realization of producing extreme-value.
Realization of producing extreme-image-positioning.
Market navigation to reach global corners.
Understanding value of creating local grassroots prosperity.
Learning to live in harmony, diversity and tolerance

Rest is fakery

As new measurements of success; nations are now required to prove their mastery of transforming their own working-citizenry capable of global age skills with lifelong learning? To ensure a nation ending up with soft-power-assets and to become globally agile on trade and claim their global image supremacy of innovative excellence, leaving far behind hard-asset-centric traditionally structured economies based on short-term profit results.

New models of creating national wealth and identity; If investing only on selected lower hanging fruits is considered a good strategy, now investing more into hidden jungles and new trees while they grow into new fruitful heights will become an even smarter strategy. Building a soft-power-asset-centric society is much better over maintaining large industrial age complexes. Economies will increasingly face restless youth and anxious citizenry and there is nothing more critical than creating nationwide grassroots prosperity, all via lifelong learning and uplifting fear of automation, because displaced citizenry needs protection. As the cycle of laborious-work are getting replaced by smart-work while smart-work getting replaced by smarter machines, the ‘Masters of Robots’ will be the new smart unlearners, the ‘Slaves of Robots’ will be the deniers of change. 

Critical Observations: Why immediate replacement of old education system around the world with new global-age transformation has become so necessary? It’s a liability on national productivity, it’s a burden of debt on the emerging youth of any nation and it’s rotten from the inside damaging economic philosophies in silence of the day.

This can be a wake-up call for economies of the world; rethinking, reprioritizing, reinvesting and reinventing investable all over. Is it is easy to transform people?

No, it’s almost impossible most of the times.

Here are some global-age options and new style thinking.
Calling mass transformation and mobilization of working-citizenry

Four Enlightenments:

Self-Discovery; close your eyes and discover your hidden talents, create supreme performance and become a global age thinker. This will open entrepreneurial thinking.

Enterprising Journeys; open your eyes and study the global age and indulge at the enterprise level, build and create massive growth. Do something phenomenal. This will open new business ideas.

Grassroots Prosperity; open your mind and lead by example, deploy and create grassroots prosperity, improve surroundings, help teams, share knowledge and create extreme value. This will open collaborative thinking and leadership roles.

National Mobilization; open your heart and share your authoritative command and knowledge, mobilize and help your own nation and make sure it is moving in the right direction, assist in boosting the national economy.

Mankind demands straight answers, seeks new alternatives, strives for grassroots prosperity and ready to lift the weight via power of entrepreneurialism

New Challenges:
Can a nation declare top priority to discover its hidden and untapped talents of their citizenry?
Can it demonstrate superior skills to mobilize small and medium businesses across the nation?
Can it adopt continuous self-learning to foster occupational superiority for the nation?
Can national leadership demonstrate refined understanding of entrepreneurial skills?

Fact: The world can easily absorb unlimited exportable ideas in unlimited vertical markets.
Fact: The well-designed innovative ideas are worthy of such quadrupled volumes.
Fact: The entrepreneurial and dormant talents of a nation are capable of such tasks.
Fact: The new global age skills, knowledge and execution are now the missing links

The Five Pillars of Global-Age Transformation:

Global Age Exportability
What’s really stopping a high potential enterprise from expanding to 100 countries?  

Global Age Thinking:
What will it take to re-organize and operate as a multinational organization with little or no extra costs?

Global Age Modeling:
How to optimize and integrate soft power assets against sluggish hard asset centricity.

Global Age Execution:
How to get trained to achieve what normally takes 365 normal days to do it in only 365 dramatic hours.

Global Age Presence:
How to bring the image supremacy of innovative excellence into global space and profit.

Global Age Prosperity:
How to become a magnet of prosperity with new revenues, new funding, and new alliances

Cold Facts and Warm Realities: Success at times is failure management; failure is often a lost battle, but not a lost war, as ultimate success is not necessarily winning the war, success is far more about understanding the battlefield, as the real victory is hidden outside the war. Soon, economic leadership will be less about raw commodities and infrastructures and more about mental endurance and global age skills of its citizenry. Imagination and entrepreneurialism is far more important over commodities and infrastructures

Three steps for Midsize Economy to advance on grassroots prosperity:

Identify 1000 to 10,000 or 1,000,000 small and midsize entrepreneurs within a nation, and create a national agenda to quadruple their performance on innovative excellence and exportability. Caution–this is not to be confused with old out-dated-dysfunctional-government-data rather it requires the assembly of ultra-modern-digital and current-profiles of midsize enterprises within a nation. Deploy digitization of top national trade associations and chambers of commences to upgrade to world-class digital platforms so that their entire membership can skate nationally and globally showcasing their goods and services. Caution–this is not to be confused with already broken and disconnected websites from the last decade; this is more like LinkedIn format with colorful and highly interactive platforms. Study Expothon Strategy and how over a decade it has perfected the model; observe how Worldbank also adopted similar approach with their well executed Econothon project. Expect some serious deployments in this arena. It is time to engage the national entrepreneurial talent, 1000-10,000- or 1,000,000 small and midsize businesses in ongoing discussions and high quality entrepreneurial debates and to create global bounce that will unveil unlimited growth. Caution– this is not to be confused with a single plastic award night; this is about outstanding performance of the remaining 364 days of the year each filled with active and daily engagements.

Timelines: Once tackled the mobilization agenda starts progress within a year or less.

Serious Questions:

Why is there a critical lack of knowledge? Was there ever a senior level debate and authoritative discussion on such deep integrations?  Some 10,000 Chambers of Commerce of the world are sorting out trade wars and trade disputes, but there is little or no concentration on new global age demands of the global marketplace for their memberships.  In the meantime there are some 100,000 National Trade Associations of the world stuck in last century thinking when it comes to advanced level digital platforms and are afraid about their future roles and return on investment on membership fees. They all will shine under new flags of creating new global bounce and prosperity. Caution—what’s already on the floor of these organizations is just dead weight, in needs of a scale-up to measure the opportunity loss. Public Sectors of the world are grossly under-optimized and have little or no knowledge of their own hidden talents.  They are seriously afraid of entrepreneurialism and without global-age skills or innovative ideas they know nothing about taming the elephant of global survival. It is time for the Public Sector to become confident, highly optimized and fearless, and will contribute freely to new ideas and prosper.

By all means, such transformations are no easy task; but however, they are less dependent on new-funding but are heavily dependent on global-age-execution and strategic agenda

In the meanwhile, the small and mid-size economies of the world though in critical need of global age expertise, are already drowning in hot soup and do not have the time, finances or the luxury to intellectualizing such issues. They have already lost faith in their local support but once rejuvenated they will become the number one source of new job creation within the nation and once they wake up to the fact that prosperity is easily in their reach. Lifelong learning and systematic training and coaching is where the missing links are as individually it cannot but in a massive mobilization mode it games a game changer for all small and medium enterprises. So what’s stopping this?

The overflow of free technologies, progressive local, national and global solutions are grossly misunderstood and the least optimized areas. This is an ocean in need swimmers and scuba-divers.

Such programs also improve current status of the national issues, like:

Nations are already flooded with massive innovations, but lack massive commercialization.
Nations have over certifications and degrees but seriously lack business directions.
Nations have empty incubators and exhausted accelerators like real estate projects.
Nations have economic development programs but often without mega punch.

A Round-table or Senior Cabinet Level discussions is always good starting point.

Naseem Javed is a corporate philosopher, Chairman of Expothon Worldwide; a Canadian Think tank focused on National Mobilization of Entrepreneurialism Protocols on Platform Economy and exportability solutions now gaining global attention. His latest book; Alpha Dreamers; the five billions connected who will change the world.

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Economy

Pandemic Recovery: Three Sudden Surprise Gifts

Naseem Javed

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A new shine across the globe is entering into boardrooms; a new awakening is enforced and a new shift emerges… the sudden popularity of new awakenings

“Simultaneous Synchronization”: For about a decade, the most difficult concept at leadership discussions in both Public and Private Sectors was ‘simultaneous synchronization’ deployments of national mobilization and upskilling of hidden talents on large-scale digital platforms. The obvious lack of vision and skills at top leadership grossly failed to figure out how all this works. Suddenly this the most talked about topic and now seen as a rapid-fire solution to save broken economies. The pressure cooker with skeleton economies on the boil now released the steam and blew the whistle to attract open-minded innovative thinking. It is finally time to lead, follow or get out of the way.

“Upskilling and Reskilling”: Last many decades the developed economies blatantly ignored this area, now like a shark bite there is global panic on upskilling and reskilling. Ignoring once the almighty German model of apprenticeships treated as young apprentices changing motor-oils but preferred teams of ‘wet behind ears’ young MBA learning hedge-funding charades as better options. Today, upskilling to have skilled citizenry capable of quality productivity, performance and profitability is critical for survival. Trade wars are old schools, internal wars of upskilling to create confident and skilled citizenry to save nations with dignity is now the new survival.

“Big Business Is Big But Small Business Is Bigger”:
Economic heads buried in sands all across Western economies, resorted to election time lip service and allowed SME slip down the drains. Big business is big but small business is bigger. Worship accordingly. Today, heavy membership fees from top firms influence all trade gropus all over the world, from national trade associations to Chambers of Commerce, sacrificing local SME. Do the math.

Pandemic awakened the sleeping giants: All three above challenges now suddenly becoming survival strategies and nation-by-nation and town-by-town new language and dialogues emerging as new gifts. A new series under way with high-level discussions and debates by Expothon covers such topics in greater depths.

The warm facts and cold realties;
No further proof required, as most economies of the world will be shrink-wrapped soon
No further validation needed, as unlimited printing monies will only flush down economies
No further denial accepted, as hologramic stock markets would not save the jobs or nations

When facing truth becomes taboo; facing music suddenly becomes a new occupation; understanding cries of public a new art and swimming against economic currents a new science. In the end, it is the critical analysis and complex problem solving to capture the dodging truth a new survival strategy. The pandemic recovery is no longer election theatrics but all about Mastery of Covidism, isolating novices to deal with recessions, depressions and economic compressions.

The Tribulation Factors:
50% of downtown of the world may not survive,
50% of tall office towers may go empty,
50% of retail shops may go under,
50% businesses may never open,
50% of displaced may not have any jobs soon
50% of office workers may work remote,
50% economies may lose a decade to recover,
50% hailed as successful economy now mostly illusion,
50% political leadership may lose power,

The Brand New Thinking:
100% brand new concepts underway around the world,
100% new skill-transformation underway for new economies,
100% global thinking connecting and shaping new platforms,
100% new vision shaping brand new voice over fakery,
100% rejection of old competency over new thinking,
100% adoption of entrepreneurial mobilization,
100% rise on diversity, tolerance and equality issues
100% critical thinking to face the truth and march forward,

Stand up and claim your expertise. Ask three difficult questions:
Why local or national mobilization of entrepreneurialism and upskilling of small midsize business base cross the nation stalled? When or if ever was there a national or regional bold debate on these specific topics? What possible forces are stopping such activities and why?Depending on style and type of skilled leadership and based on geographic location some, amazing opportunities are alive and active. Study Pentiana Project, especially when all such thinking is not new funding dependent as these are all deployment hungry and execution starved steps.
The rest is easy

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Millionaires for Humanity Petition: Who does not want to sign

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Recently millionaires from different countries signed a petition under the name “Millionaire for Humanity” demanding their respective governments to raise taxes on them to help with the coronavirus pandemic. More than 80 individuals have signed the letter, and most signatories belong to the developed nations like the US, UK, and Germany. One of the key aspects of the petition is that taxes can only create a huge impact against charitable contributions, no matter how generous these contributions are. It might be a rare and historic moment to witness wealthy individuals quoting “Tax us, Tax us, Tax us” to fund the social sector like health, education, and security. The phrase “rebalance our world through wealth tax” seems like a unique moment of truth for the wealthy to play their part towards humanity.

But is the voluntary action enough to counter the state’s inaction to tax the wealthy? A few individuals’ voluntary actions are a drop in the ocean that might not even make a dent to make all wealthy accountable?Wealthy do indeed pay proportionate taxes according to their state laws in many parts of the world. But the bitter truth is that there are also increased tax avoidance cases by the wealthy, which the Paradise Papers, Panama Papers, and other evidence show. That is why there is a rigorous debate on taxing the rich even more.

According to Oxfam’s 2020 report world’s 2,153 dollar billionaires had more wealth than 4.6 billion people or 60% of the world population in 2019. Even in the aftermath of COVID-19 there has been no change in the millionaire’s status quo who actually saw their wealth grow exponentially. According to Forbes magazine report, 10 billionaires gained $51.3 billion or Rs 3.9 lakh crore (at exchange rate of Rs 76) in just a week between April 2 and 9 when the global economy was almost shut (except for a few essentials) and millions were losing their incomes and jobs.They did this through the stock market. These billionaires included Jeff Bezos, Mark Zuckerberg, Warren Buffett, Elon Musk, Bill Gates, and Mukesh Ambani.

Thus the paper analyses two main issues in relation to the petition. Firstly, why similar actions were not taken by the wealthy in the developing nations, with focus on India? Secondly, will a voluntary compliance mechanism via a petition resolve the ongoing issue of tax evasion by the wealthy?

  1. Why there is no similar petition in developing countries?

The petition seems to appear as a global movement, but in reality, it is a mere representative of the few wealthy individuals residing in developed economies. The less participation and debate amongst the developing countries on taxing the rich can be understood in terms of their societal and cultural background. In India, it is easier to project it as a home to the poorest, but it is also a home for some of the world’s wealthiest people. In this context, it is essential to understand how the wealthier population’s nature changed significantly since Independence and how a favourable tax system helped them to grow.

1.1. From Inherited wealth to private enterprise:

When the British left, a handful of business families and dynastic royalties were in charge of key economic industries. These dynastic royalties had amassed and inherited great fortunes over time due to their close ties to the colonial administration. Although there was poverty amongst the general population, the most lavish lifestyles were only enjoyed by the princely classes, some business houses and large zamindars (landlords).

Primarily the inherited wealth was the primary source of wealth amongst the wealthier population.

However, between 1961 and 1986, India’s notorious macroeconomic plight undermined a progressive effort to reduce the incumbent rich’s size and importance. Low economic growth was accompanied by a sharp reduction of the real value of wealth held by the top 0.1%. The backdrop for this decline was itself rooted in the integration of India when the government quickly took steps to abolish inherited wealth amongst the super-rich royalty. Hence inflation, progressive taxation, and nationalization that characterized the late 1960s and 1970s punished the outdated rentier class and expropriated much-existing wealth.

In the 1990s, domestic and external liberalization happened in India, resulting in the deregulation of taxation and private investment. This led to a rapid increase in stock market capitalization relative to GDP. In fact, given the tremendous rise in stock market capitalization, it seems possible that wealth concentration in India may have surpassed its pre-1970 levels in recent decades. This transformative wealth dynamics of the 1960s and 1970s are crucial to understanding how the elite class, once populated by inherited wealth, is now made up of private enterprises.

However, the rise of the new private enterprise did not address income inequality, only to make the rich richer and the poor more miserable. According to Oxfam’s January 2020 report ‘Time to Care‘ said, in 2019, the wealth of top 1% Indians went up by 46% while that of the bottom 50% by 3%. In 2019, the top 1% Indians held 42.5% of national wealth, which is, more than 4 times the wealth of 953 million people constituting the bottom 70%. The bottom 50% held just 2.5% of national wealth. According to the Credit Suisse’s ‘Global Wealth Report of 2019‘, there were 7,59,000 dollar millionaires in India 2019, up from 725,000 in 2018 and 34,000 in 2010. This shows that even as a developing economy we do not have a dearth of wealthy people who are unable to participate in the petition.

1.2. How the tax system works favourably for the wealthy?

In developing countries, the governments’ primary focus is on resource mobilization, which dictates their tax system. This is due to the unequal income distribution. However, the tax system is also designed in such a way that makes it harder to tax the rich. This is because wealthy taxpayers’ political and economic power often prevents the government from developing fiscal reforms to increase their tax burdens.

Moreover, there are high personal exemptions and the plethora of other exemptions and deductions that benefit those with high incomes (for example, the exemption of capital gains from tax, generous deductions for medical and educational expenses, the low taxation of financial income). India has been an active recipient of FDI for decades. As a result, it results in lower effective tax rates for MNCs.

Simultaneously, the government keeps on slashing the corporate income tax rate during every budget, providing strong incentives for taxpayers to choose the corporate form of doing business for purely tax reasons. For instance, the Indian government slashed corporate tax to 22% (without exemptions) for domestic companies in September 2019, bringing the effective rate to 25.17%  (with surcharge and cess). Such a move happened when the economy had nose-dived for several consecutive quarters.

According to the IMF, the combination of tax incentives and low corporate tax rates leads to the following:

  • Increased incidences of tax evasion due to the ease with which multinationals seem able to avoid tax, combined with the three-decade-long decline in corporate tax rates, undermines both tax revenue and faith in the fairness of the overall tax system and
  • the current situation is especially harmful to low-income countries, depriving them of much-needed revenue to help them achieve higher economic growth, reduce poverty and meet the 2030 Sustainable Development Goals.

Hence, it can be observed that wealthy individuals are provided with a plethora of tax incentives in a developing economy to prevent capital flight. However, this does not translate into high tax morale for these individuals due to increased tax evasion incidences. Now is the time for the wealthy to take part in the petition to share responsibility in rebuilding the economy.

  • Will the Petition be effective in achieving fair taxation by the wealthy?

2.1. Assessing the problem of tax evasion by the wealthy

Empirical data has shown (e.g., E. Hofmann, Voracek, Bock,& Kirchler, 2017b[1]), that the motivation to engage in tax avoidance and evasion increases with wealth. Recent studies indicate that tax evasion is directly proportional to wealth, with the top 0.01% of the wealth distribution (i.e., households with more than $40 million in net wealth) evades almost 30% of their wealth and income tax versus 3% by taxpayers overall (Altstaeder, Johannesen, & Zucman, 2017[2]). With the aim to minimize their taxes, it is easier for the wealthy to hire tax agents who are skilled in devising ways to achieve that(Sakurai & Braithwaite, 2001[3]).

Tax avoidance is a huge issue that amounts to $240 billion every year (Rs 18.24 lakh crore), according to OECD-G20’s anti-tax avoidance initiative, ‘Action Plan on Base Erosion and Profit Shifting’ (BEPS). Recent data by Fair Tax Mark shows that Facebook, Google and four other US tech giants, described as the Silicon Six (others being Netflix, Amazon, Microsoft, and Apple) had avoided paying $100 billion tax (Rs 760,000 crore) between 2010 and 2019. Due to tax evasion, according to 2019 IMF study, the non-OECD countries are losing 1.3% of their GDP or $200 billion of revenue every year while the OECD countries about 1% of GDP or close to $450 billion.

Nonetheless, the blame cannot be squarely put on the wealthy for causing tax evasion. It is the legal, political, and economic context of national tax loopholes which not only give the wealthy many more opportunities to avoid taxes than the average citizen but might also create an ideal environment that legitimises aggressive tax avoidance behaviour.

2.2. How the petition will help in combating massive tax evasion problem?

It can be said that the petition is an example of committed motivation by the wealthy which drives them to pay taxes because of a felt moral duty(Gangl et al., 2015[4]) or due to emotional stress, caused by anticipated guilt or shame (Blaufus, Bob, Otto, & Wolf, 2017[5]). However before delving into the question whether such an initiative will be effective to combat tax evasion in the long run, it is important to understand the social psychological process that motivates the wealthy to either pay or evade taxes.

The wealthy can easily identify and compare themselves with other wealthy individuals as a result of pychological process in relation to belonging to a particular group. As a result they imitate not only lifestyles but also tax behviours out of comparison and competition, because one does not want to fall behind in the financial race (Mols & Jetten, 2017[6]).For instance, if all wealthy friends move money to offshore tax havens, then the individual will also more likely do that.

Also, wealthy individuals do acquire a heightened sense of self-esteem, freedom, and perceived control, which increases the willingness to resist anything that hinders freedom (Brehm, 1966[7]). Taxes on the wealthy is a classical case where the rich find it as an attack on their personal freedom for which they look for ways to fight against it. In fact, experimental research shows that coercive fines and audits increase taxpayer reactance more than less coercive attempts by the tax authorities (Gangl, Pfabigan, Lamm, Kirchler, & Hofmann, 2017). Thus, when faced with coercive form of taxation wealthier individuals will be motivated to employ more resources (compared to the average taxpayers) to escape this situation. This might make the classical coercive attempts to increase the tax honesty less effective.

In such a scenario, the voluntary form of tax compliance might appear as the ultimate solution to fight against reactance. Such a form of compliance comes with trust in the tax system, and thus, people accept their tax obligations without threatening audits and fines. However, state measures like suspending fines and audits or tax amnesties, which gives leeway to rich taxpayers to repatriate their money from tax havens without being fined, also show no long‐term positive effect (Alm & Beck, 1993[8]; Toro, Story, Hartnett, Russell, & Van‐Driessche, 2017[9]). Thus, it is important to combine voluntary and coercive tax measures to ensure fair taxation with a sense of tax honesty on the part of the wealthy individuals.

3. Conclusion

In view of the COVID-19 it is apparent that the petition by the few wealthy individuals brings in a wave of hope towards achieving fair taxation for the sake of humanity. However, the outreach is still not global, with a participation of a fraction of wealthy individuals from a few developed economies.Thus, there is a need to ensure the huge participation of wealthy people, not only from developing economies but those involved in tax evasion.

As discussed in the article,  tax-related decisions of the wealthy are different from average taxpayers due to social psychological differences of belonging to a particular community. So a unique approach must be followed to motivate the wealthier population to pay their share of taxes.

3.1. Possible solutions:

There are many ways to motivate the wealthy, either in developed or in developing countries, to contribute more taxes to the benefit of society. It is true that mere public plea to join the campaign will not attract the attention of majority of wealthy individuals. On the other hand, coercive audit or fines to ensure fair taxation also does not help much towards the cause. For example, a fine of 18.8 million Euros imposed on Portugal’s football superstar Cristiano Ronaldo did not diminish the fame and positive image associated with the player.

One possible solution to influence the tax decisions of the wealthy is to combine coercive and voluntary state measures by publicly naming and shaming the wealthy individuals who resist to be part of the global campaign or pay their fair share of taxes. Thus, if such accusations on famous wealthy individuals like Chief Executive Officers or politicians violate ordinary citizens’ tax morale, these latter might start questioning the reasons for their tax honesty. For instance, after Greece published a blacklist of over 4,000 citizens who owed tax money to the state (Aswestopoulos, 2012[10]),  it experienced a decline in the shadow economy’s size from 25.4% in 2010 to 22.0% in 2016 (Schneider, 2016[11]). This way, identifying evaders publicly may act as punishment and a deterrent from engaging in aggressive tax avoidance. However, it is equally true that shaming needs active public support and media coverage, without which the debate towards fair taxation will lose its grip. So the time is ripe for citizens to join their hands in the global movement towards fair tax and compel the wealthy to be accountable.


[1]Ackermann, L., Becker, B., Daubenberger, M., Faigle, P., Polke‐Majewski, K., Rohrbeck, F., … Schröm, O. (2017, June). Cum‐ex. The great tax robbery. Zeit Online .

[2]Altstaeder, A., Johannesen, N., & Zucman, G. (2017). Tax evasion and inequality . Retrieved from http://www.nielsjohannesen.net/wp-content/uploads/AJZ2017.pdf

[3]Sakurai, Y., & Braithwaite, V. (2001). Taxpayers’ perceptions of the ideal tax adviser: Playing safe or saving dollars ? Working Paper No 5, The Australian National University, Centre of Tax System Integrity.

[4]Gangl, K., Hofmann, E., & Kirchler, E. (2015). Tax authorities’ interaction with taxpayers: A conception of compliance in social dilemmas by power and trust. New Ideas in Psychology37, 13–23. https://doi.org/10.1016/j.newideapsych.2014.12

[5]Blaufus, K., Bob, J., Otto, P. E., & Wolf, N. (2017). The effect of tax privacy on tax compliance – An experimental investigation. European Accounting Review26(3), 561–580.

[6]Mols, F., & Jetten, J. (2017). The wealth paradox. Economic prosperity and the hardening of attitudes. Cambridge, UK: Cambridge University Press.

[7]Brehm, J. W. (1966). A theory of psychological reactance. Oxford, UK: Academic Press.

[8]Alm, J., & Beck, W. (1993). Tax amnesties and compliance in the long run: A time series analysis. National Tax Journal46(1), 53–60.

[9]Toro, J., Story, T., Hartnett, D., Russell, B., & Van‐Driessche, F. (2017). Italy. Enhancing governance and effectiveness of the fiscal agencies. Interantional Monetary Fund. Fiscal Affairs Department . Retrieved from http://www.mef.gov.it/inevidenza/documenti/Rapporto_FMI_Eng.pdf

[10]Aswestopoulos, W. (2012, January). Finanzamt stellt “Liste der Schande” ins Netz. Focus Online . Retrieved from http://www.focus.de/finanzen/news/staatsverschuldung/liste-der-schande-viele-deutsche-unter-griechischen-steuersuendern_aid_706059.html

[11]Schneider, F. (2016). Estimating the size of the shadow economies of highly‐developed countries: Selected results. CESifo Dice Report14(4), 44–53.

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Economy

Decoding European Union’s Economy

Aakash Agarwal

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European Union (EU) is a political and economic union which consists of 27 member countries. It acts as one economic unit in the world economy and is considered a major world trading power. They are subject to obligation and privileges of the membership. It focuses on comprehensive growth of all countries.

The Formation

The EU was formed to end the centuries of warfare that culminated during World War II. The union was founded in 1992 with the Maastricht treaty but was given its reformed structure and powers in 2007 with the Lisbon treaty. Under these treaties, the 27 members agree to come together with their sovereignty and delegate many decision-making powers to the unified body. Currently, there are seven official EU institutions which are made for the executive, judicial and financial functions. The primary aim of this treaty was to boost economic social and political integration amongst the nation.

The European Central Bank is the EU’s central bank . It regulates monetary policy and manages bank lending rates and foreign exchange reserves . The institution over the

years has expanded and strengthened its own authority. It has proved to be a competent institution and is serving its purpose.

However, It has also faced a series of unforeseen circumstances including the 2008

economic crisis, an influx of migrants from the Middle East and Africa and Brexit Negotiations. In June 2016 the United Kingdom decided to leave the European Unionand officially from 31 January 2020, the United Kingdom is no longer part of the EU.

Breakdown Of The Economy

Most countries that are a part of the European Union and use the same currency Euro. A group of nineteen of the twenty-seven EU members use the Euro currency. Therefore the trade process is simplified and the rest of the EU is also legally required to join the eurozone at some point. In terms of the total value of all the goods and services, it is considered bigger than the US economy. The 19 EU member states that comprise the euro area accounted for 85.5% of the EU’s GDP in 2019. However, due to the unforeseen circumstances implemented across the world in 2020 GDP is down by 3.8% in the euro area and 3.5% in the EU.

The EU’s trade structure has helped it to become one of the world’s largest economies after China. In 2018 it surpassed China’s GDP with a difference of $3.3 trillion. These measurements use purchasing power parity to the account of discrepancy between each country’s standard of living. Some experts argue that the EU produces more but the US still a larger economy, whereas the US is a country and the EU is a trading area which compiles the 27 countries. Despite the eurozone debt crisis, the EU is staggering towards a bigger fiscal integration. The EU’s currency, the euro has successfully competed with the global currency dollar. The EU’s exports in 2019 were for products petroleum, automobiles and medication while its top imports are petroleum, communications equipment, and natural gas.

Classification Of Eu Budget

The biggest chunk of the percent spent on the agricultural sector. Which includes the direct payment to farmers development of fisheries, forest and rural areas. The second chunk goes into economic, social and territorial cohesion, which is meant to help the EU’s less developed countries. It includes infrastructure, job development, technical assistance for

Small business. The rest is spent on research and development and building the EU’s foreign policy which is under Global Europe. The EU budget must balance as it has no authority to spend more than it takes in.

Trade

The 64% trade is undertaken within the EU states. The trade with the rest of the world accounts for some 15.6% of global imports and exports. The EU countries had the second-largest share of global imports and exports of goods in 2016.

Employability

After the global economic crisis and eurozone turbulence in 2008, the employability saw a rise in future.


The Economy Post Covid-19

The world economy has witnessed a plethora of ups and downs in this pandemic. European Union leaders sealed a 750 million – euro ($857billion) deal for their coronavirus blighted economies after a marathon talk. The EU was slow to coordinate initially with the pandemic and already weakened by Brexit, It was important for an upfront on economic aid which would demonstrate its come back. Earlier it has been observed bitter rows over how the grants would be managed. Council President Michel said securing a deal as “not only about money, it’s about people, about the European future, about our unity.”

Chancellor of Germany Angela Merkel said on Monday that EU leaders had come up with a “framework” for a possible agreement. Whereas Michel told, “This agreement sends a concrete signal that Europe is a force for action”. French President Emmanuel Macron, who spearheaded the deal with German Chancellor Angela Merkel, hailed it as “truly historic”.

But Currently, Countries like France, Spain and smaller nations in the EU have been adversely affected, It is believed that the economies of France and Spain will shrink by over 10%. The Country’s GDP is not expected to return to last year’s level before 2022. Earlier this month that it expects the EU economy to shrink 8.3% in 2020, The European Commission said considerably worse than the 7.4% slump predicted two months ago.

Comparisons With India

The deficiency in India’s COVID relief package is inadequate fiscal spending ( just 1% of GDP). For spending more the government will have to borrow more. However, without spending, the economy will likely struggle a little longer. Whereas in the EU package Euro 390 billion of grants. Cheap loans and credit guarantees are important but for a declining economy, stress should be given more to wage subsidies and emphasis on the MSME sector.

The meeting of the EU is the first major in-person gathering of world leaders since the COVID-19. The ideal emphasis which every leader is saying is the concept of ‘fundamental of the internal market should begin again with all necessary precautions and not just countries most affected by the crisis but also for those which benefit the most from the internal.

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