There is a very interesting news below -- a movement towards abolition of income tax, retention of consumption taxes to finance a smaller government, among a number of US states. If this trend will continue, Washington DC, the capital of the federal government, will be seen by many US states as a parasite: while many states are engaged in tax competition like abolition of income tax, the White House and its coterie of legislators are busy enacting new taxes (like taxing US citizens even if they are working and living abroad!) because they are busy making wars elsewhere, or promising endless foreign aid, or government to government transfer of taxpayers' money.
The free market movement in the world will become stronger if the free marketers in the US and Europe will succeed in shrinking their governments, in reducing the taxes and interventionist powers of their governments. A bloated US (and European) government is among the most convenient excuse given by politicians, bureaucrats and consultants in poorer countries, why taxes and government presence in many facets of the citizens' lives, should remain high. For instance, big foreign aid will require big local counterpart funding.
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http://online.wsj.com/article/SB116969533548687229.html
Rich States, Poor States
January 25, 2007
If you're searching for the next big thing in American politics, it's wise to keep an eye on the states. Here's one possibility: the abolition of state income taxes.
In Georgia, Missouri and South Carolina, Governors and state legislatures are drafting serious proposals to repeal their income taxes to promote economic development. St. Louis, one of America's most distressed cities, may overturn its wage/income tax as a way to spur urban revival.
And in Michigan, the legislature is in the last stages of phasing out its hated business income tax -- the most onerous in the land. "States are now in a ferocious competition to attract jobs and businesses," says economist Arthur Laffer, who is advising several Governors and legislators on the issue, "and one of the best ways to win this race is to abolish the state income tax."
...But the biggest target is the income tax. Newly re-elected South Carolina Governor Mark Sanford is talking of reviving his plan to phase out the income tax over 18 years. Mr. Sanford ran into opposition from the legislature in his first term, but he tells us that "I still consider this one of my top priorities and if the legislature wants to do it, I would be ecstatic."
Georgia may beat Mr. Sanford to the punch. House Republicans in Atlanta have announced that one of their top priorities is to use the half-billion-dollar budget surplus as a downpayment to "dismantle the current tax code."
House Republican Majority Leader Jerry Keen tells us the debate in Atlanta is between a flat-rate income tax and a plan that would "do away with the personal income tax but broaden the sales tax by eliminating 107 exemptions. We're committed to a pro-growth tax plan that announces to the country that Georgia is open for business."
...The idea of financing state services without an income tax is hardly radical. Nine states today -- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming -- manage well Without one. With a few exceptions, the non-income tax states are America's Most prosperous. Meanwhile, the high income tax states, which tend to be congregated in the Northeast, keep surrendering jobs, people, and voters to the South and West...
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On the Laffer Curve and Optimal Tax Rate
The Laffer curve is a graph showing an optimal level of tax rate where government revenues reach maximum level. If the tax rate further increases, say from 30% to 40%, revenues go down as people would rather reduce work and have more sleep and leisure since more income means more taxes to be surrendered to the government. Or people would rather misdeclare their income to evade paying more taxes, or bribe tax collectors, resulting in lower revenues than projected.
The concept was developed by an American economist, Prof. ArthurLaffer. He further argued that lower taxes result in lower prices, higher demand, leading to higher production and hence, bigger economic pie and higher taxable base. We can add that lower taxes or tax cuts are tantamount to pay hike to everyone whose monthly and yearly income are automatically deducted with government withholding taxes. Thus, pay hike means more pockets for the people, more spending power, more demand and consumption, and so on.
Taxes are always distortionary. You remove 1/3 to ½ of a productive person's monthly income and savings, purportedly for whatever welfarist and missionary functions by the state, you immediately alterthe working, spending and savings attitude of that person. For instance, instead of bringing his family to dream vacations in thePhilippines (Boracay, Coron-Palawan, Puerto Galera, Baguio, etc.) twice a year – that creates jobs to many people living and working there – they only go there once every 2 years. Because the equivalentvalue of his expenses for such holiday was confiscated by the government. And government, once it holds the money, can decide whether to improve the justice system that will benefit everyone, or improve the chances for re-election of the incumbent politicians through endless pork barrel or charter-change campaigns.
So, since taxes are distortionary because they are forced collections, taxes should be few and small. That is, the distortions should be few and small.
In a way, you can have 2 (or more) Laffer curves, depending on yourpurpose. For instance:
Laffer curve 1 – a level of tax rate that will finance the current and projected levelof government expenditures. For statist and interventionist politicians, plus their coterie of equally statist consultants, staff and bureaucrats, retain the current government expenditures of 50-60%of GDP (the current level in many western & northern European countries), then devise a tax rate that will somehow give you a tax & "non-tax" (but still compulsory payment to government, like driver's license fee, passport fee…) revenues of 50-60% of GDP.
Laffer curve 2 – a level of tax rate to really unburden taxpayers and finance a government that is just focused on a few, limited, andimportant function – protect lives, properties, and individual liberties of the citizens. Because the more functions and welfarism that a government intends to do, the more taxes, fees and penalties itwill collect and confiscate from the citizens.
The Laffer curve concept is a beautiful guide to remind governments when they should stop confiscating a big portion of the income and savings of their citizens. It is also a good reminder to socialists, welfarists, and other advocates of wanton confiscation of income andsavings of productive people, that there is a limit to such philosophy based on forced equality, if not envy.
Monday, March 19, 2007
Monday, March 12, 2007
Business Bureaucracy 1: Avoiding government: Egyptian experience
A report from the International Herald Tribune last Feb. 28, 2007, "Egyptians look to God, not government, for help" (by Michael Slackman), said:
"...Cairo is home to 15 million and often described as the center of the Arab world, an incubator of culture and ideas... The fisherman on the Nile, the shepherd in the road and residents ofso- called informal communities say their experiences navigating city life have taught them the same lessons: the government is not there to better their lives; advancement is based on connections and bribes; the central authority is at best a benign force to be avoided. "Everything is from God," said Mezar, the fisherman, who was speaking practically, not theologically. "There is no such thing as government. The government is one thing and we are something else. What am I going to get from the government?"
...One brick in the foundation of single-party rule has been public resignation. There is no widespread expectation that the authorities will give the common man a voice, and so there is rarely any outrage when they do not. The fisherman, the shepherd and Fathy all said that the most they could hope for from the government was that it stay out of their lives. "We hope God keeps the municipality away from us," Sayed said as hesat in a wooden chair, surveying his fetid flock of goats and sheepwith headlights streaming by.
Such a feeling of separation is one reason that the leadership has been able to clamp down on opposition political activities without incurring widespread public wrath, political analysts say." People see the government as something quite foreign or removed from their lives," said Diane Singerman, a professor in government at the American University in Washington who has written extensively aboutCairo. "Commuters to the city, or poor peddlers and working people, do not see the government as particularly interested in their lives, andthey also see politics as quite elite and risky and something to stayaway from."
Officials say part of the disillusionment comes from unrealistic expectations, a holdover from the heady days of Gamal Abdel Nasser, the Egyptian leader from 1954 to 1970, when government jobs were deemed a right and cradle-to- grave care a promise...
Rest of article at
http://www.iht.com/articles/2007/02/28/news/cairo.php
This feeling by the poor in Cairo could be the feeling of most Egyptian taxpayers, where the costs of government -- the myriads of taxes, fees, regulations, inspections, accreditations -- are very clear but the benefits are minimal, if any.
Once a government bureaucracy has reached a certain level of"bigness", it acquires a life of its own and its main purpose is to perpetuate itself, if not expand further. In that case, government service becomes "self service" and those in the private sector, thosewho toil a lot to feed an ever-expanding bureaucracy, are engaged in real "public service" based on voluntary exchange.
The Philippine bureaucracy as a whole I think, has not reached that level yet. Many local government bureaucracies though, have bad attitude problem, that those wanting to become entrepreneurs and job creators are seen as potential labor exploiters, potential environmental pests, andpotential perpetuators of social inequality. Hence, they must be strictly regulated even before they can start opening up their business.
"...Cairo is home to 15 million and often described as the center of the Arab world, an incubator of culture and ideas... The fisherman on the Nile, the shepherd in the road and residents ofso- called informal communities say their experiences navigating city life have taught them the same lessons: the government is not there to better their lives; advancement is based on connections and bribes; the central authority is at best a benign force to be avoided. "Everything is from God," said Mezar, the fisherman, who was speaking practically, not theologically. "There is no such thing as government. The government is one thing and we are something else. What am I going to get from the government?"
...One brick in the foundation of single-party rule has been public resignation. There is no widespread expectation that the authorities will give the common man a voice, and so there is rarely any outrage when they do not. The fisherman, the shepherd and Fathy all said that the most they could hope for from the government was that it stay out of their lives. "We hope God keeps the municipality away from us," Sayed said as hesat in a wooden chair, surveying his fetid flock of goats and sheepwith headlights streaming by.
Such a feeling of separation is one reason that the leadership has been able to clamp down on opposition political activities without incurring widespread public wrath, political analysts say." People see the government as something quite foreign or removed from their lives," said Diane Singerman, a professor in government at the American University in Washington who has written extensively aboutCairo. "Commuters to the city, or poor peddlers and working people, do not see the government as particularly interested in their lives, andthey also see politics as quite elite and risky and something to stayaway from."
Officials say part of the disillusionment comes from unrealistic expectations, a holdover from the heady days of Gamal Abdel Nasser, the Egyptian leader from 1954 to 1970, when government jobs were deemed a right and cradle-to- grave care a promise...
Rest of article at
http://www.iht.com/articles/2007/02/28/news/cairo.php
This feeling by the poor in Cairo could be the feeling of most Egyptian taxpayers, where the costs of government -- the myriads of taxes, fees, regulations, inspections, accreditations -- are very clear but the benefits are minimal, if any.
Once a government bureaucracy has reached a certain level of"bigness", it acquires a life of its own and its main purpose is to perpetuate itself, if not expand further. In that case, government service becomes "self service" and those in the private sector, thosewho toil a lot to feed an ever-expanding bureaucracy, are engaged in real "public service" based on voluntary exchange.
The Philippine bureaucracy as a whole I think, has not reached that level yet. Many local government bureaucracies though, have bad attitude problem, that those wanting to become entrepreneurs and job creators are seen as potential labor exploiters, potential environmental pests, andpotential perpetuators of social inequality. Hence, they must be strictly regulated even before they can start opening up their business.
Oil Politics 1: Bush vs. Chavez?
As Bush tours a number of Latin American countries mainly to projectthe US government as not-as-evil-as-pictured by Hugo Chavez, theVenezuelan President, the usual anti-US government sentiments in the continent (and elsewhere actually) are fired up.
In most news analysis and stories, Mr. Bush is pictured as the leaderof "open capitalism" while Mr. Chavez is the leader of "modern socialism" in Latin America. The former is backed up by trillions of $ of American taxpayers' money, while the latter is backed up by millions of barrels of petroleum production and deposits. But are they really ideological nemesis?
Mr. Bush's government confiscates a big portion of American people's monthly and annual incomes, whether they work in the US or abroad. His government further collects taxes from the savings and consumption (the after-income-tax take home pay) of the citizens, a substantial portion of which goes to Iraq war (about $8 billion/month direct costsalone), in Afghanistan war, and anti-terror war elsewhere around the globe.
Mr. Chavez's government "nationalized" foreign petroleum companies (mainly American, British and French companies) and sold oil to manyLatin American countries at low prices. I dont know how much taxes from Venezuelan people Mr. Chavez also confiscates from their monthly and annualy income.
At the end of the day, both Mr. Bush and Mr. Chavez are not exactly "ideological enemies". Both believe in the coercive power of the state in taking away a big portion of the private citizens' income and savings, and both are practicing it. What distinguish one from the other, however, is the degree of coercion that they practice. While Mr. Chavez attempts a socialist, really-big-state model, Mr. Bush attempts a welfarist and militarist, still big-state model.
Meanwhile, I posted this last June 30, 2006:
World Oil Prices
World oil prices, in US$/barrel
In most news analysis and stories, Mr. Bush is pictured as the leaderof "open capitalism" while Mr. Chavez is the leader of "modern socialism" in Latin America. The former is backed up by trillions of $ of American taxpayers' money, while the latter is backed up by millions of barrels of petroleum production and deposits. But are they really ideological nemesis?
Mr. Bush's government confiscates a big portion of American people's monthly and annual incomes, whether they work in the US or abroad. His government further collects taxes from the savings and consumption (the after-income-tax take home pay) of the citizens, a substantial portion of which goes to Iraq war (about $8 billion/month direct costsalone), in Afghanistan war, and anti-terror war elsewhere around the globe.
Mr. Chavez's government "nationalized" foreign petroleum companies (mainly American, British and French companies) and sold oil to manyLatin American countries at low prices. I dont know how much taxes from Venezuelan people Mr. Chavez also confiscates from their monthly and annualy income.
At the end of the day, both Mr. Bush and Mr. Chavez are not exactly "ideological enemies". Both believe in the coercive power of the state in taking away a big portion of the private citizens' income and savings, and both are practicing it. What distinguish one from the other, however, is the degree of coercion that they practice. While Mr. Chavez attempts a socialist, really-big-state model, Mr. Bush attempts a welfarist and militarist, still big-state model.
Meanwhile, I posted this last June 30, 2006:
World Oil Prices
World oil prices, in US$/barrel
2006: New York, Dubai
June:
May: 70.96, 65.25
April: 70.25, 64.31
March: 62.97, 58.37
February: 61.93, 57.70
January: 66.15, 58.65(?)
2005:
December: 60.04, 53.04
November:
October: 62.22, 53.86
September:
August:
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World oil prices, 1970-2005
West Texas Intermediate (WTI) prices, $/barrel
Nominal price, Equiv. in current $
Feb. 1970: 2, 7
'73 1st oil crisis
Dec. 73: 5, 17
Feb. 74: 11.5, 39
'79-80 2nd oil crisis
Feb. 79: 22, 51
May 79: 30, 70
Nov. 79: 40, 87
'85-86 OPEC production hike
Feb. 86: 16, 26
July 86: 10, 15.5
'90-91 1st Iraq war
July 90: 17, 23
Oct. 90: 35, 47
'98 Asian crisis + OPEC production hike
Dec. 98: 10, 12
'99-00 OPEC production cut
Sept. 00: 32, 36
'02-03 Venezuela gen. strike + US invasion of Iraq
Jan. 03: 33, 35
June 03: 30.5, 32
OPEC production cut
May 04: 40, 41
2005 Hurricanes, Gulf of Mexico
Sept. 05: 66
June:
May: 70.96, 65.25
April: 70.25, 64.31
March: 62.97, 58.37
February: 61.93, 57.70
January: 66.15, 58.65(?)
2005:
December: 60.04, 53.04
November:
October: 62.22, 53.86
September:
August:
-----------
World oil prices, 1970-2005
West Texas Intermediate (WTI) prices, $/barrel
Nominal price, Equiv. in current $
Feb. 1970: 2, 7
'73 1st oil crisis
Dec. 73: 5, 17
Feb. 74: 11.5, 39
'79-80 2nd oil crisis
Feb. 79: 22, 51
May 79: 30, 70
Nov. 79: 40, 87
'85-86 OPEC production hike
Feb. 86: 16, 26
July 86: 10, 15.5
'90-91 1st Iraq war
July 90: 17, 23
Oct. 90: 35, 47
'98 Asian crisis + OPEC production hike
Dec. 98: 10, 12
'99-00 OPEC production cut
Sept. 00: 32, 36
'02-03 Venezuela gen. strike + US invasion of Iraq
Jan. 03: 33, 35
June 03: 30.5, 32
OPEC production cut
May 04: 40, 41
2005 Hurricanes, Gulf of Mexico
Sept. 05: 66
Sunday, February 04, 2007
Pol. Ideology 6: Quotes from Adam Smith
I stumbled on these good quotes here from Adam Smith, the father of free market economic thinking. I got these quotes from the Adam Smith Institute website, http://www.adamsmith.org/quotes.
I chose the quotes on "the invisible hand" and "the profusion of government". The quote on butcher and baker is very down to earth. The rice farmers and fisherfolks think mainly of themselves and the profit they can generate from their efforts, but in the process, society's welfare is served.
The quote on government, especially on "The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands..." is damning for many state bureaucrats and politicians.
enjoy!
---------------
(1) The invisible hand
Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
--The Wealth of Nations, Book IV Chapter II
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.
-- The Wealth of Nations, Book I Chapter II
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.
-- The Theory of Moral Sentiments, Part I Section I Chapter I
(2) The profusion of government
In the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times...
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.
-- The Wealth of Nations, Book II, Chapter III
The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.
-- The Wealth Of Nations, Book IV, Chapter II.
Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands... Such people, as they themselves produce nothing, are all maintained by the produce of other men's labour... Those unproductive hands, who should be maintained by a part only of the spare revenue of the people, may consume so great a share of their whole revenue, and thereby oblige so great a number to encroach upon their capitals, upon the funds destined for the maintenance of productive labour, that all the frugality and good conduct of individuals may not be able to compensate the waste and degradation of produce occasioned by this violent and forced encroachment.
-- The Wealth of Nations, Book II, Chapter III
The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it… He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.
-- The Theory Of Moral Sentiments, Part VI, Section II, Chapter II.invisib
* See also :
Pol. Ideology 5: Have Movements for Liberty Progressed? June 26, 2006
I chose the quotes on "the invisible hand" and "the profusion of government". The quote on butcher and baker is very down to earth. The rice farmers and fisherfolks think mainly of themselves and the profit they can generate from their efforts, but in the process, society's welfare is served.
The quote on government, especially on "The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands..." is damning for many state bureaucrats and politicians.
enjoy!
---------------
(1) The invisible hand
Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
--The Wealth of Nations, Book IV Chapter II
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.
-- The Wealth of Nations, Book I Chapter II
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.
-- The Theory of Moral Sentiments, Part I Section I Chapter I
(2) The profusion of government
In the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times...
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.
-- The Wealth of Nations, Book II, Chapter III
The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.
-- The Wealth Of Nations, Book IV, Chapter II.
Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands... Such people, as they themselves produce nothing, are all maintained by the produce of other men's labour... Those unproductive hands, who should be maintained by a part only of the spare revenue of the people, may consume so great a share of their whole revenue, and thereby oblige so great a number to encroach upon their capitals, upon the funds destined for the maintenance of productive labour, that all the frugality and good conduct of individuals may not be able to compensate the waste and degradation of produce occasioned by this violent and forced encroachment.
-- The Wealth of Nations, Book II, Chapter III
The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it… He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.
-- The Theory Of Moral Sentiments, Part VI, Section II, Chapter II.invisib
* See also :
Pol. Ideology 1: Minimal Government Manifesto, October 18, 2005
Pol. Ideology 2: Evolution of Market and State, October 25, 2005
Pol. Ideology 3: Liberal vs. Libertarian, November 06, 2005
Pol. Ideology 4: Comments to Minimal Government Manifesto, December 05, 2005Pol. Ideology 5: Have Movements for Liberty Progressed? June 26, 2006
Wednesday, December 06, 2006
Tax Cut 3: Flat Tax Countries in the World, 2006
Below are countries which have low, flat income tax; parenthesis is year of introduction.
Note the "tax competition" sweeping eastern Europe.
Kyrgyzstan (2006) 10%
Kazakhstan (2007) 10%
Georgia (2005) 12%
Ukraine (2004) 13%
Russia (2001) 13%
Iraq (2004) 15%
Macedonia (2007) 15%; by 2008, 12%; by 2009, 10%
Romania (2005) 16%
Hong Kong (1947) max 16%
Slovakia (2004) 19%
Jersey and Guernsey (1940) 20%
Estonia (1994) 26%
by 2006 23%; by 2007 22%; by 2008 21%; by 2009 20%
Latvia (1994) 25%
Lithuania (1994) 33%
by July 2006 27%; by 2008 24%
source: World Taxpayers Association (WTA, www.worldtaxpayers.org)
Thanks to Bjorn Tarras-Wahlberg, the Sec-Gen. of WTA.
If the same type of "tax competition" will happen in Asia, then it will supplement the environment of less-regulated economy, at least compared to Europe, and should result in more dynamic economies.
But many Asian governments also aspire to be like the welfare states of Europe, paying less attention to the fiscal burden of such policy and just think more of the votes they can get during elections.
Note the "tax competition" sweeping eastern Europe.
Kyrgyzstan (2006) 10%
Kazakhstan (2007) 10%
Georgia (2005) 12%
Ukraine (2004) 13%
Russia (2001) 13%
Iraq (2004) 15%
Macedonia (2007) 15%; by 2008, 12%; by 2009, 10%
Romania (2005) 16%
Hong Kong (1947) max 16%
Slovakia (2004) 19%
Jersey and Guernsey (1940) 20%
Estonia (1994) 26%
by 2006 23%; by 2007 22%; by 2008 21%; by 2009 20%
Latvia (1994) 25%
Lithuania (1994) 33%
by July 2006 27%; by 2008 24%
source: World Taxpayers Association (WTA, www.worldtaxpayers.org)
Thanks to Bjorn Tarras-Wahlberg, the Sec-Gen. of WTA.
If the same type of "tax competition" will happen in Asia, then it will supplement the environment of less-regulated economy, at least compared to Europe, and should result in more dynamic economies.
But many Asian governments also aspire to be like the welfare states of Europe, paying less attention to the fiscal burden of such policy and just think more of the votes they can get during elections.
Thursday, November 16, 2006
Tax Cut 2: Ireland, Turkey
Another good development in the "tax cut" and "tax competition" movement in the world -- N. Ireland planning to slash its corporate income tax from 30% to only 12%! Wow! And it looks like this tax cut can help unite further theProtestants and the Catholic Sinn Fein, which will further improve peace and order situation there.
The tax-hungry finance officers of UK are somehow panicking, naturally. More and more UK-based companies will start moving to N. Ireland and do business there. While N. Ireland's tax rate goes down, it does not necessarily lead to lower revenues as the revenue base -- the numberof companies doing business and paying taxes -- will go up*.
(* Note: Tax Revenue = tax rate x revenue base)
My country's legislators -- egged by Finance and congressionalbureaucrats -- raised corporate income tax, along with VAT hike,effective this year from 32% to 35%. This is 3x that being planned inindustrialized N. Ireland!
As I have posted in the previous blog re "flat tax countries in the world", the extent of tax competition in eastern Europe is really hot, and some economies in Western Europe, like Ireland, are simply adjusting. But EU rules and bureaucracies make their plans a little bit more difficult.
I hope the same tax competition will happen in Asia too!
A lower tax rate but plentier number of business and entrepreneurs doing businesses, expanding the production of various goods and services in the economy, should work well in creating more jobs and slashing poverty.
Below is the news report from the Financial Times:
http://www.ft.com/cms/s/b5807d8a-7358-11db-9bac-0000779e2340.html
12% business tax proposed for N Ireland
By John Murray Brown in Dublin
Published: November 13 2006 22:40
Companies in Northern Ireland would be exempt from corporation tax on the first 60 per cent of profits under a private sector plan to be put to the UK government on Wednesday in a bid to stimulate the province's economy.
The paper is published by the Economic Research Institute, a local think tank, and backed by Sir George Quigley, former chairman of Ulster Bank and head of the Northern Ireland civil service. It represents the most detailed case yet made for special tax treatment for the province, which is emerging from three decades of unrest.
Under the proposal, after the zero-rated first 60 per cent of profits, the remainder would incur tax at the prevailing UK rate of 30 percent. This would mean businesses based in the province would have a rate of 12 per cent, in effect, just less than that in the Irish Republic.
The issue has become embroiled in the political negotiations on therestoration of the assembly and power sharing executive. Both theProtestant Democratic Unionists and largely Catholic Sinn Féin arecalling for lower tax rates. Ian Paisley junior, son of the DUP leader Ian Paisley, says that without a tax deal the DUP will not agree to go into government with Sinn Féin by the deadline of the end of next week...
Meanwhile, I posted this last June 23, 2006:
Tax Cut: Turkey
Turkey will abolish (ie, drop to zero) the 15% withholding tax on income and dividends from financial instruments held by foreign investors starting January next year. While the rates applied to Turkish residents would be cut from 15 to 10 per cent.
Government though, will retain the 15 per cent withholding tax on deposits and repos held by domestic investors, while the tax exemption for derivative instruments will stay.
See FT report today, "Turkey to scrap tax for foreign investors" (www.ft.com).
Such moves are meant to help reverse the flight of capital from risky emerging markets that started last May.
Turkey is still waiting for EU nod to be admitted as a new member of the currently 25-countries union. EU is known for heavy regulations. Previously liberalizing countries that later on became EU members went back to multiple regulations. Dominant member-countries of the EU like France and Germany do not like low corporate taxes in other member-countries because the former are afraid that they might further lose some of their corporations and move to countries with lower taxes.
So this tax cut move by Turkey might not sound good to the ears of certain EU bureaucrats who want more, more taxes and avoid any competition in tax policies (ie, bringing down taxes as low as possible).
Finally, here are the corporate income taxes for the following Asia-Pacific countries, 2006 (in %):
Japan 40.1 (40.7 in '05)
S. Korea 35
Pakistan 35
Philippines 35 (32 in '05)
India 33.7 (36.6 in '05)
China 33
New Zealand 33
Sri Lanka 32.5
Australia 30
Bangladesh 30
Indonesia 30
Thailand 30
Malaysia 28
Vietnam 28
Taiwan 25
Singapore 20
Hong Kong 17.5
The tax-hungry finance officers of UK are somehow panicking, naturally. More and more UK-based companies will start moving to N. Ireland and do business there. While N. Ireland's tax rate goes down, it does not necessarily lead to lower revenues as the revenue base -- the numberof companies doing business and paying taxes -- will go up*.
(* Note: Tax Revenue = tax rate x revenue base)
My country's legislators -- egged by Finance and congressionalbureaucrats -- raised corporate income tax, along with VAT hike,effective this year from 32% to 35%. This is 3x that being planned inindustrialized N. Ireland!
As I have posted in the previous blog re "flat tax countries in the world", the extent of tax competition in eastern Europe is really hot, and some economies in Western Europe, like Ireland, are simply adjusting. But EU rules and bureaucracies make their plans a little bit more difficult.
I hope the same tax competition will happen in Asia too!
A lower tax rate but plentier number of business and entrepreneurs doing businesses, expanding the production of various goods and services in the economy, should work well in creating more jobs and slashing poverty.
Below is the news report from the Financial Times:
http://www.ft.com/cms/s/b5807d8a-7358-11db-9bac-0000779e2340.html
12% business tax proposed for N Ireland
By John Murray Brown in Dublin
Published: November 13 2006 22:40
Companies in Northern Ireland would be exempt from corporation tax on the first 60 per cent of profits under a private sector plan to be put to the UK government on Wednesday in a bid to stimulate the province's economy.
The paper is published by the Economic Research Institute, a local think tank, and backed by Sir George Quigley, former chairman of Ulster Bank and head of the Northern Ireland civil service. It represents the most detailed case yet made for special tax treatment for the province, which is emerging from three decades of unrest.
Under the proposal, after the zero-rated first 60 per cent of profits, the remainder would incur tax at the prevailing UK rate of 30 percent. This would mean businesses based in the province would have a rate of 12 per cent, in effect, just less than that in the Irish Republic.
The issue has become embroiled in the political negotiations on therestoration of the assembly and power sharing executive. Both theProtestant Democratic Unionists and largely Catholic Sinn Féin arecalling for lower tax rates. Ian Paisley junior, son of the DUP leader Ian Paisley, says that without a tax deal the DUP will not agree to go into government with Sinn Féin by the deadline of the end of next week...
Meanwhile, I posted this last June 23, 2006:
Tax Cut: Turkey
Turkey will abolish (ie, drop to zero) the 15% withholding tax on income and dividends from financial instruments held by foreign investors starting January next year. While the rates applied to Turkish residents would be cut from 15 to 10 per cent.
Government though, will retain the 15 per cent withholding tax on deposits and repos held by domestic investors, while the tax exemption for derivative instruments will stay.
See FT report today, "Turkey to scrap tax for foreign investors" (www.ft.com).
Such moves are meant to help reverse the flight of capital from risky emerging markets that started last May.
Turkey is still waiting for EU nod to be admitted as a new member of the currently 25-countries union. EU is known for heavy regulations. Previously liberalizing countries that later on became EU members went back to multiple regulations. Dominant member-countries of the EU like France and Germany do not like low corporate taxes in other member-countries because the former are afraid that they might further lose some of their corporations and move to countries with lower taxes.
So this tax cut move by Turkey might not sound good to the ears of certain EU bureaucrats who want more, more taxes and avoid any competition in tax policies (ie, bringing down taxes as low as possible).
Finally, here are the corporate income taxes for the following Asia-Pacific countries, 2006 (in %):
Japan 40.1 (40.7 in '05)
S. Korea 35
Pakistan 35
Philippines 35 (32 in '05)
India 33.7 (36.6 in '05)
China 33
New Zealand 33
Sri Lanka 32.5
Australia 30
Bangladesh 30
Indonesia 30
Thailand 30
Malaysia 28
Vietnam 28
Taiwan 25
Singapore 20
Hong Kong 17.5
Thursday, November 09, 2006
CSOs and State 2: NGOs and Government Clubs
There are plenty of world forum/meetings by statists and socialist-oriented civil society groups, as well as clubs by governments and international bureaucrats. Among these are:
1. World Social Forum (WSF) – “an annual meeting held by members of the anti-globalization movement to coordinate world campaigns, share and refine organizing strategies”, according to its main website. In the WSF India held in mid-November 2006, it describes it as a forum of “groups and movements of civil society that are opposed to neo- liberalism and to domination of the world by capital and any form of imperialism”. In short, it is the forum of anti-globalization, anti-market, anti-capitalism, anti-free trade, sort of anti-everything NGOs, media people, academics, etc. They mobilize many people in WTO Ministerial meeting, in G8 summit, in annual WB-IMF meeting, in WEF, as well as their own-initiated international meetings.
2. International People’s Forum (IPF) – it “demands for multilateral debt cancellation, transparency and participatory audits of international financial institutions (IFI) lending and policies, and an end to IFI involvement in privatization of public services and environmentally destructive projects”. It was formed in Singapore during the WB-IMF Annual Meeting held in that city-state in September 2006. Many of the IPF members or convenors are also WSF members.
3 World Economic Forum (WEF) – a private international organization that links big businessmen with political leaders around the world, with occasional participation by big NGO leaders. It’s a smaller gathering compared to WSF but more influential economically and politically.
4 WB-IMF Annual Meeting – a gathering of international bureaucrats of these 2 bodies plus finance ministers, central bank governors, other top bureaucrats of member-countries. Selected number of civil society leaders (often among WSF leaders also) are also invited by the WB-IMF guys.
5 G8 Summit – a gathering of the Presidents or Prime Ministers of 8 industrialized countries + big developing countries like China, Brazil, India, etc.
6. Organization for Economic Cooperation and Development (OECD) – a club of governments of 30 industrialized and industrializing countries around the world promoting “democratic government and the market economy”.
7. United Nations (UN) – the mother of all international bureaucracies. Somehow the name “united nations” is a misnomer; a more appropriate term should have been “United Governments”. Though a number of international “public goods” have been addressed by the UN, it has also introduced a number of international “public bads”, like the justification if not promotion of high taxation in many countries to finance more government- and UN-sponsored projects.
While many civil society groups are very critical of multilateral institutions like the WB-IMF, government clubs like the UN, G8, OECD, and private international for a like WEF, those civil society groups actually have more similarities than differences with them. That is, they are mostly statists and forced collectivists. They want the state to have bigger intervention in the citizens’ lives. They want individual’s incomes to be forcibly collectivized, and individual responsibilities be transformed to state and collective responsibilities.
The only difference between those who criticize and those being criticized, is the degree of intervention to be slapped on the citizens; ie, the level of taxation that will be confiscated from the citizens’ pockets, the level of budgetary reallocation, and level of subsidies that will be given to the poor. While the WB-IMF and government clubs can tolerate a certain level of de-governmentization through privatization and economic deregulations, the statist NGOs want socialism-type of income confiscation and welfare distribution.
Free marketers can criticize both groups because they advocate very small income confiscation, small government intervention, and bigger individual freedom and responsibility. Individuals, not just big corporations, comprise markets. Thus, to liberalize markets is to liberalize individuals.
------
Last March 23, 2006, I wrote this:
The Elites and the Statists
1. World Social Forum (WSF) – “an annual meeting held by members of the anti-globalization movement to coordinate world campaigns, share and refine organizing strategies”, according to its main website. In the WSF India held in mid-November 2006, it describes it as a forum of “groups and movements of civil society that are opposed to neo- liberalism and to domination of the world by capital and any form of imperialism”. In short, it is the forum of anti-globalization, anti-market, anti-capitalism, anti-free trade, sort of anti-everything NGOs, media people, academics, etc. They mobilize many people in WTO Ministerial meeting, in G8 summit, in annual WB-IMF meeting, in WEF, as well as their own-initiated international meetings.
2. International People’s Forum (IPF) – it “demands for multilateral debt cancellation, transparency and participatory audits of international financial institutions (IFI) lending and policies, and an end to IFI involvement in privatization of public services and environmentally destructive projects”. It was formed in Singapore during the WB-IMF Annual Meeting held in that city-state in September 2006. Many of the IPF members or convenors are also WSF members.
3 World Economic Forum (WEF) – a private international organization that links big businessmen with political leaders around the world, with occasional participation by big NGO leaders. It’s a smaller gathering compared to WSF but more influential economically and politically.
4 WB-IMF Annual Meeting – a gathering of international bureaucrats of these 2 bodies plus finance ministers, central bank governors, other top bureaucrats of member-countries. Selected number of civil society leaders (often among WSF leaders also) are also invited by the WB-IMF guys.
5 G8 Summit – a gathering of the Presidents or Prime Ministers of 8 industrialized countries + big developing countries like China, Brazil, India, etc.
6. Organization for Economic Cooperation and Development (OECD) – a club of governments of 30 industrialized and industrializing countries around the world promoting “democratic government and the market economy”.
7. United Nations (UN) – the mother of all international bureaucracies. Somehow the name “united nations” is a misnomer; a more appropriate term should have been “United Governments”. Though a number of international “public goods” have been addressed by the UN, it has also introduced a number of international “public bads”, like the justification if not promotion of high taxation in many countries to finance more government- and UN-sponsored projects.
While many civil society groups are very critical of multilateral institutions like the WB-IMF, government clubs like the UN, G8, OECD, and private international for a like WEF, those civil society groups actually have more similarities than differences with them. That is, they are mostly statists and forced collectivists. They want the state to have bigger intervention in the citizens’ lives. They want individual’s incomes to be forcibly collectivized, and individual responsibilities be transformed to state and collective responsibilities.
The only difference between those who criticize and those being criticized, is the degree of intervention to be slapped on the citizens; ie, the level of taxation that will be confiscated from the citizens’ pockets, the level of budgetary reallocation, and level of subsidies that will be given to the poor. While the WB-IMF and government clubs can tolerate a certain level of de-governmentization through privatization and economic deregulations, the statist NGOs want socialism-type of income confiscation and welfare distribution.
Free marketers can criticize both groups because they advocate very small income confiscation, small government intervention, and bigger individual freedom and responsibility. Individuals, not just big corporations, comprise markets. Thus, to liberalize markets is to liberalize individuals.
------
Last March 23, 2006, I wrote this:
The Elites and the Statists
A friend, Atty. Ime Deinla, called my attention to a paper entitled "Voices from the Top of the Pile: Elite Perceptions of Poverty and the Poor in the Philippines", authored by Gerard Clarke and Marites Sison. It was in a pdf formal file, 28 pages long, no date of publication or name of paper where it was published. I skimmed through the pages and read the concluding points, and this part is a disappointment to me. The authors wrote,
I have said it and I will say it again: poverty is very often self-inflicted.
Recipe #1 to be poor: Just be a lazy bum, don't work hard (if at all), drink and party too often; you'd rather drink and discuss with other guys how hard life is, how govt. and the church and the rich and your relatives abandon you, while a piece of land near your house which could have been planted to vegetables or raising farm animals are full of tall cogons, other grasses and vines.
Recipe #2: Be lazy and have plenty of kids, be irresponsible; anyway, government will confiscate rich people's income and savings to educate and feed your kids.
Recipe #3: Work hard and earn big (like working abroad), but also spend hard and save nothing; when the rainy days come, nothing to dig from the pockets.
There are other natural causes (like your house and car and land were gobbled by a volcanic eruption or a big landslide, or cracked to pieces by a strong earthquake) and other people-caused miseries (like your house burned, your car stolen, your land grabbed, your family members beaten and imprisoned for unjustified reasons) to explain poverty. And my favorite, government and its underdevelopmental roles of high and multiple taxes; costly and multiple requirements, permits, licenses, registrations, inspections, accreditations, before one can even start a carinderia or vulcanizing shop, if you do not want to be labelled as "underground" economy and "tax evader".
I would also add that philantrophy should not be dismissed as if it's an insignificant and near useless act, not to be pooh-poohed as encouraging patron-client mentality. Philantrophy and charity signify 2 important things:
(1) It is a voluntary act by an individual or group of individuals in a voluntary organization (club, association, brotherhood, etc.), not mandated by the constitution or by legislation or by an executive order; and
(2) Its funding is from the individuals' savings, from hard work, not from taxes and forced contribution.
Of course, some guys and organizations or foundations use charity for tax-shield purposes. But that's primarily because taxes are high and a plenty, and it's not the taxpayers who determine where the tax money goes, but the politicians and top government bureaucrats.
Ooppss, these kind of remarks would probably alert the authors, Clarke and Sison, to call Oplas "one of the elites". Wrrooonnggg!! Este, riiiigghhhtttt pala!
I'm E-lectrifyingly L-ovable, I-nsiduous, and T-antalizingly E-lectrifying! That's ELITE! hehehe, joke.
The paper is commendable though for gathering a big number of insightful interviewees, from politicians to businessmen to academics and NGO leaders.
The Filipino elite feel a sense of responsibility to the poor, but this responsibility is met through the provision of assistance on a patron-client or philantrophic activity, rather than more substantive commitment to redistributive action led by the state, involving for instance, elaborate social safety nets financed by higher taxes.Ouch! We don't have enough taxes, we need to create more? And our taxes ain't high enough, we need to hike them more? Socialists, statists and interventionists really like this line. Confiscate more income and savings from the rich, from the elite, from the productive sectors of society, and give them to the poor, the downtrodden, the weak. And an elaborate maze of bureaucracies, multiple-layers of politicians, with rah-rah boys from many NGOs and civil societies as middlemen between the two.
I have said it and I will say it again: poverty is very often self-inflicted.
Recipe #1 to be poor: Just be a lazy bum, don't work hard (if at all), drink and party too often; you'd rather drink and discuss with other guys how hard life is, how govt. and the church and the rich and your relatives abandon you, while a piece of land near your house which could have been planted to vegetables or raising farm animals are full of tall cogons, other grasses and vines.
Recipe #2: Be lazy and have plenty of kids, be irresponsible; anyway, government will confiscate rich people's income and savings to educate and feed your kids.
Recipe #3: Work hard and earn big (like working abroad), but also spend hard and save nothing; when the rainy days come, nothing to dig from the pockets.
There are other natural causes (like your house and car and land were gobbled by a volcanic eruption or a big landslide, or cracked to pieces by a strong earthquake) and other people-caused miseries (like your house burned, your car stolen, your land grabbed, your family members beaten and imprisoned for unjustified reasons) to explain poverty. And my favorite, government and its underdevelopmental roles of high and multiple taxes; costly and multiple requirements, permits, licenses, registrations, inspections, accreditations, before one can even start a carinderia or vulcanizing shop, if you do not want to be labelled as "underground" economy and "tax evader".
I would also add that philantrophy should not be dismissed as if it's an insignificant and near useless act, not to be pooh-poohed as encouraging patron-client mentality. Philantrophy and charity signify 2 important things:
(1) It is a voluntary act by an individual or group of individuals in a voluntary organization (club, association, brotherhood, etc.), not mandated by the constitution or by legislation or by an executive order; and
(2) Its funding is from the individuals' savings, from hard work, not from taxes and forced contribution.
Of course, some guys and organizations or foundations use charity for tax-shield purposes. But that's primarily because taxes are high and a plenty, and it's not the taxpayers who determine where the tax money goes, but the politicians and top government bureaucrats.
Ooppss, these kind of remarks would probably alert the authors, Clarke and Sison, to call Oplas "one of the elites". Wrrooonnggg!! Este, riiiigghhhtttt pala!
I'm E-lectrifyingly L-ovable, I-nsiduous, and T-antalizingly E-lectrifying! That's ELITE! hehehe, joke.
The paper is commendable though for gathering a big number of insightful interviewees, from politicians to businessmen to academics and NGO leaders.
Wednesday, November 08, 2006
ASEAN 1: Asian regional bureaucracies
As mobility of people, goods and services, around the world hastens, so have government bureaucracies expand. Not contented with “national planning”, governments extend to “regional planning” and “global planning”.
In Asia, as many Asian economies grow fast – ie, relative to other countries and regions or continent in the world – Asian governments also create new regional bureaucracies fast. Consider the following bodies in Asia:
1. ASEAN – Association of South East Asian Nations, 10 countries (Indonesia, Singapore, Malaysia, Brunei, Philippines, Thailand, Laos, Cambodia, Vietnam, Myanmar). Presidents and/or Prime Ministers of these countries meet annually.
2. ASEAN Plus Three (APT) – composed of Asean10 + China, S. Korea, Japan. Since the late 90s, there has been no strict or exclusive “Asean summit” because they have always been APT. And more recently, it has become “Asean Plus Six”, composed of APT + India, Australia and New Zealand.
3. APEC – Asia-Pacific Economic Cooperation. This is an expanded Asean + 6, to also include the US, Canada, Russia, Mexico, Chile, Peru, other Pacific countries. They hold summit meeting every 2 years.
4. ASEM – Asia-Europe Meeting; composed of APT + EU 25. They also hold summit meeting every 2 years.
5. CSCAP – Council for Security Cooperation in the Asia Pacific
6. NPCSD – North Pacific Cooperative Security Dialogue
7. NEACD – North East Asia Cooperation Dialogue
Proposed new bodies:
1. AMF – Asian Monetary Fund; this is different from the existing Asian Development Bank (ADB).
2. CNEA – Concert of North East Asia
3. NEASD – North East Asia Security Dialogue
Not included above are the various regional free trade agreements (FTAs) like AFTA (Asean FTA), SAFTA (South Asia FTA), NEAFTA (North East Asia FTA, and so on. Also not included are dozens of bilateral FTAs (existing and proposed), or EPAs (economic partnership agreement) by Japan with selected Asean countries.
Annual or biennial summit meetings of those heads of states and their ministers are never cheap. Taxpayers of host governments spend a lot for those meetings, including preparations and post-meeting monitoring.
The main goal of those various bureaucracies and trade agreements is “more economic and security cooperation” among governments of member-countries. This sounds lofty and holy, except that they are agreements AMONG GOVERNMENTS, and not exactly among the citizens of those countries. People to people voluntary arrangement is still restricted by their own governments. For instance, despite the Japan-Philippines EPA (JPEPA), an average old and aging Japanese household who cannot find younger private Japanese caretakers and nurses, cannot hire a Filipino caretaker or health professional anytime they want because the Japanese government has restricted to only X number the entry of Filipino (and other foreign) health professionals every year.
It has been noted that the single important rule of a bureaucracy, is that once created, it does not die on its own; rather, it seeks to expand and perpetuate itself. After all, the cost of maintaining and expanding it does not come from its own bureaucrats, but from the taxpayers in the private sector.
In Asia, as many Asian economies grow fast – ie, relative to other countries and regions or continent in the world – Asian governments also create new regional bureaucracies fast. Consider the following bodies in Asia:
1. ASEAN – Association of South East Asian Nations, 10 countries (Indonesia, Singapore, Malaysia, Brunei, Philippines, Thailand, Laos, Cambodia, Vietnam, Myanmar). Presidents and/or Prime Ministers of these countries meet annually.
2. ASEAN Plus Three (APT) – composed of Asean10 + China, S. Korea, Japan. Since the late 90s, there has been no strict or exclusive “Asean summit” because they have always been APT. And more recently, it has become “Asean Plus Six”, composed of APT + India, Australia and New Zealand.
3. APEC – Asia-Pacific Economic Cooperation. This is an expanded Asean + 6, to also include the US, Canada, Russia, Mexico, Chile, Peru, other Pacific countries. They hold summit meeting every 2 years.
4. ASEM – Asia-Europe Meeting; composed of APT + EU 25. They also hold summit meeting every 2 years.
5. CSCAP – Council for Security Cooperation in the Asia Pacific
6. NPCSD – North Pacific Cooperative Security Dialogue
7. NEACD – North East Asia Cooperation Dialogue
Proposed new bodies:
1. AMF – Asian Monetary Fund; this is different from the existing Asian Development Bank (ADB).
2. CNEA – Concert of North East Asia
3. NEASD – North East Asia Security Dialogue
Not included above are the various regional free trade agreements (FTAs) like AFTA (Asean FTA), SAFTA (South Asia FTA), NEAFTA (North East Asia FTA, and so on. Also not included are dozens of bilateral FTAs (existing and proposed), or EPAs (economic partnership agreement) by Japan with selected Asean countries.
Annual or biennial summit meetings of those heads of states and their ministers are never cheap. Taxpayers of host governments spend a lot for those meetings, including preparations and post-meeting monitoring.
The main goal of those various bureaucracies and trade agreements is “more economic and security cooperation” among governments of member-countries. This sounds lofty and holy, except that they are agreements AMONG GOVERNMENTS, and not exactly among the citizens of those countries. People to people voluntary arrangement is still restricted by their own governments. For instance, despite the Japan-Philippines EPA (JPEPA), an average old and aging Japanese household who cannot find younger private Japanese caretakers and nurses, cannot hire a Filipino caretaker or health professional anytime they want because the Japanese government has restricted to only X number the entry of Filipino (and other foreign) health professionals every year.
It has been noted that the single important rule of a bureaucracy, is that once created, it does not die on its own; rather, it seeks to expand and perpetuate itself. After all, the cost of maintaining and expanding it does not come from its own bureaucrats, but from the taxpayers in the private sector.
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