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2017
Asia Needs more Dialogue
Solutions to urban pollution may prove complex
Spread of ESGs could herald new global movement
Investing in quality education is imperative if India wants to reap demographic dividends
China needs to lead in new multi-stakeholder world
China’s B&R initiative leading a resurgence of Asia
Education is key - but long-term: Can we survive?
New wave of robots will be beneficial to all
China needs to continue with its ‘heavy lifting’
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
China well-placed to power its future through green technology advances
China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
US talk of isolation jars with growing links in Europe and Asia
Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
Booming India, but too few toilets
Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
Innovative models for public finance
By Frank-Jürgen Richter
Public Finance, March 29 2012
 

There is an urgent need for a complete revamp in the existing models of public finance. Most countries across the world are relying on borrowing as one of the principal means of funding their ever-growing expenses. It has brought the public debts to levels that are completely unsustainable for too long.

Developed countries like Japan, Italy, Greece, Portugal, Ireland and United States have debt levels that are more than 100% of their GDP. The UK, Singapore, France and Canada are not much better either with their public debt of more than 80% of their GDP. This debt is ever increasing. Most countries are struggling to meet their immediate obligations, something which has led to the crisis.

The past few years has seen a slowdown in many large economies. In order to boost GDP, governments resorted to an increase in government spending. It has been a recipe for disaster that has brought significant increases in overall public debt.

Traditionally, taxes have been the mainstay of public finance. Taxes across most European countries have increased significantly to the level that they are impeding growth. Many governments are doling out subsidies, unemployment benefits and welfare schemes, which indirectly promote idleness and inefficiencies.

Vedas, traditional Indian scriptures, say that government should collect taxes like a honeybee collects honey from flowers. The bees take the honey without damaging the flowers and aid in growth and reproduction. Governments of today need to follow a similar tax model to run economies efficiently.

The United Kingdom has individual tax rates ranging from 20-50%, VAT of 20% and Corporation Tax of 20-25%. In order to boost economies, governments should plan to reduce overall tax rates. This will also take away the incentive of wealthy individuals to sink their funds in tax havens.

While individuals and corporations are heavily taxed, charities are enjoying many tax benefits. They are exempt from tax on rental income, tax on capital gains, Stamp Duty, Land Tax and others. Government can gain substantially by rolling back some of these exemptions, particularly on incomes such as on capital gains and rental income. Similarly, it´s time to review tax exemptions on donations to charities.

In the Indian Union Budget released on March 16, the government introduced an innovation which made sale of residential property exempt from capital gains if the amount is invested in a small business. It will pave the way for higher investment in businesses from sale of residential properties. Such an initiative in European economies will promote investment in businesses and reduce burden on banks for mortgage loans.

The benefits system in the UK needs a complete overhaul with tax credits, housing benefit, child benefit, disability living allowance, income support, incapacity benefit, jobseeker´s allowance and council tax benefit costing over $100bn every year. Many of these benefits can be scrapped or reduced without causing grave discomfort to people. This would also help in reducing the budget deficit to manageable levels.

The government should plan public finance like a professional corporation with a focus on corporate social responsibility. It should invest in promoting innovation and building sustainable small businesses. Countries in Europe, and especially the UK, have realised that the solution to current issues lies outside Europe.

In February 2011, the UK Secretary of State for Business, Innovation and Skills, Vince Cable, presented a paper entitled Trade and investment for growth to parliament. The paper laid out the government´s plans to encourage exports from the UK, enhance inward investment and to strengthen international trading systems. With the support of government, over 20,000 SMEs have ventured into new international markets and have secured over £800m of high value opportunities overseas in just one year. These initiatives give much better return on investment on government expenditure.

The UK was always one of the most important foreign direct investment destinations in Europe. Government should make every endeavour to promote investment within the country. The investment of $15 billion by Indian industrial group Tata has made it one of the largest industrial employers in the country with over 45,000 employees. It has also helped British brands like Land Rover and Jaguar expand into fast-growing Asian economies.

In Budget 2012, George Osborne had to announce some bold and potentially unpopular changes to increase government earnings while achieving economic growth and cut borrowing to £126billion. If it eventually achieves what it sets out for, it may be a step in the right direction. Higher income tax for senior citizens and middle class is set to be an unpopular move. Perhaps the government feels that unlike higher taxes on industry, widening the tax base to individuals is not likely to scuttle growth.

Governments need to have a firm resolve to set their house right in managing public finance. Solutions to current and future public finance issues are possible with innovation, strategic thinking and a long-term vision. The road ahead might be bumpy but the only way to go now is forward.

 

Frank-Jürgen Richter is founder and chairman of Horasis, a global business community


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