USA Steel Tariffs & China

Trump complains about the imbalance of trade with China, and so he should. USA export $130 Bil to China (lots of it raw materials to be converted into finished goods for export back to USA!!) China exports $506 Bil to USA (2017 figs) Imbalance of $376 Bil. More on this later.
Steel has nothing to do with this situation, hence new Steel Import Tariffs will impact most on those countries who export steel to USA. These are.
1) Canada 16%.
2) Brazil 13%.
3) S Korea 10%.
4) Mexico 9%.
5) Russia 9%
followed by Taiwan, India, Turkey.
China’s exports to USA less than 2%.
Canada, Brazil & Mexico export 35% of their domestic Steel production to USA.
The ability of USA Steel companies to find markets overseas has been abysmal. Between 2009 & 2016 their exports rose 32%, but imports rose 219%.
USA companies clearly cannot get the domestically made steel either due to quality or price or both combined. Tariffs on imports will make steel more expensive, whether users buy higher priced local steel or pay more for their imports, hence USA products which use steel (and aluminium) will become more expensive for USA consumers and make steel using exports more expensive.
Difficult to see exactly who is going to benefit most from this potential tariff war.

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We’re all in EU together, or are we?

Google (parent company Alphabet) and Facebook are representative of a number of multinationals based in Ireland. We just love them because they employ lots of people who all pay their taxes and PRSI. Unfortunately they tend to crowd around Dublin which puts a lot of pressure on city infrastructure and because they can afford to pay good wages (you’ll see how they do later), Dublin rents and house prices get nudged steadily upwards making it difficut for those not employed by well paying multinationals to find a reasonably priced place to rent or buy.
Since Ireland joined the EU it has benefitted by being a member, but how good a member are we of this club at the moment?  Back to Google and Facebook: it is probably a fair estimate to say that the business these companies do in the countries in the EU is propotionate to that country’s  population. This is where things get tricky; the invoicing for virtually all the revenue earning activity of these two companies, and many other multinationals, are booked through mainly Ireland or Luxembourg.  
We all know why they do this. An estimate has been done whereby their total EU revenue is broken down by country in proportion to population and the corporation tax of each country applied to their extimated profits. Okay, a lot of estimating but for the purposes of this article it’s good enough. If these two companies alone for the last two years for which we have accounts had paid tax in this manner our neighbours in the EU would have collected between €5.0 and €5.4 Bill additional taxes.
Looking at an even bigger picture, the proportion of revenue paid as taxes by Google outside the EU is between 6% / 9%. Within the EU it’s 0.36% / 0.86%! In the case of Facebook, outside EU, 28/34%, within the EU 0.03% / 0.1% !!
One would imagine that Ireland should be well rewarded by these firms by way of paying some decent taxes for enabling them to perform such financial gymnastics. You gotta be joking! For example, in one year in which Facebook Ireland Ltd generated a profit of €1.75 Bill, even a miserly 5% tax would have chipped almost 9 Mil to help run the country, but oh no, by the time this FB company paid more than €1.75 Bill in “administrative expenses” tied to the use of Intellectual Property to its other Irish registered subsidiary, Facebook Holdings Ltd, the Profit became a Loss of €626,000.{F.Times article}
Meanwhile the Government provides educational facilities, primary secondary and third level to prepare citizens to be highly employable by these multinationals. In addition infrastructure is put in place, roads with flyovers and flyunders, LUAS, hospitals, fire stations, broadband etc to an able them all to operate effectively in Ireland. Does the Tax & PRSI come close to covering a decent proportion of these costs? Not on your life
So here we are now, after having got a good leg-up since becoming a member of the EEC club many years ago, providing facilities for some of the richest corporations in the world to avoid paying their fair share of taxes in the countries in which they earn their profits. As I often say, “just ‘cos its legal doesn’t mean its fair”.
What can we do! Well publish in any and every way you can the unfairness of these sneaky arrangements and by conveying our view to the local TDs and Ministers they may just come to agree that Multinational Corps have a responsibility to pay their fair share of taxes in the communities in which they make their profits. “Taxes are the price we (individuals & corporations) pay to live in a civilised society”.

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The shennigans of Yahoo !

Yahoo was taken over in June 2017 by another huge USA corp. Verizon for $4.5 Billion. Thats a whole other story.
Now I just want to tell you a little of Yahoo’s structure. Yahoo Inc. has 58 registered subsidiaries, they don’t have to have a subsidiary in every country in which they operate, they can license another company in that jurisdiction to provide their service. What is interesting is how many of the 58 subsidiaries are is “strange” locations, specifically Tax Havens.
They have 8 in the Caribbean Sea, 7 in the Cayman Islands and 1 in the “boutique” Tax Haven of Nevis, a sister island of St Kitts.
This will give you a flavour of what you can achive by “doing business” in Nevis.
The Cayman Islands, a British Overseas Territoery, are 3 islands in the West Caribbean,just south of Cuba. The population is 61,000 and there are over 92,000 companies registered there. On income and profits from any source/activity earned outside the Cayman Islands there is No income tax, No corporation tax, No capital gains tax, No inheritance tax, No payroll tax, No property tax Etc.
Accountants and lawyers selling you on the advantages of having a company there refer to it as being “Tax Neutral”! After having paid No Taxes, you’re not off the hook though, the accountants and lawyers want their pound of flesh.
Back to Yahoo Inc. who just seem to be drawn like a fly into a spiders web when it comes to having subsidiaries in in Tax Havens, 3 in Netherlands/Netherlands Antilles (a favourite spot for U2’s profits), 2 in Switzerland, 2 in Singapore, 3 in Hong Kong and last but not least in our very own little Tax Haven, Ireland, where there have 7 subsidiaries!
Up until 9 June the most important one was “Overture Search Holdco.(Ireland)” registerted in Dublin, but tax resident in ??? you guessed it, in that British Overseas Territory, the Cayman Islands. Overture collected Millions from fees paid for the use of Yahoo’s Intellectual Property, Royalties. On 31/05/17 it paid E229 Mil to a company in Mauritius in exchange for acquiring more Intellectual Property Rights. Later that very same day Overture transferred “all its IP rights” to “Yahoo!Emae” based in Dublin.
As a result of all this legal and financial shenniganns Overture reckoned it had an “estimated gain” of E815 Mil. (Yahoo’s IP rights are not sold on the open market, so their value/worth can only be estimated, and who better to make that estimate than a Yahoo subsidiary!) Then on 09/06/2017 the day before Verizon acquired Yahoo, this E815 Mil gain was declared as a dividend payable to Yahoo Inc. You would think they’d be delighted to receive it…. as long as it was received anywhere but in USA where they’d have to pay Corp Tax, so they instructed it to be paid to a Netherlands subsidiary, where no tax would be paid since it was probably only in transit, heading to some other “No Tax Jurisdiction” np doubt.
As far as I know Overture has folded up its tent and disappeared; the shuffling of Millions earned from IP Royalities worldwide will now flow into Yahoo!Emae.
When John Gogarty was in a car with a couple of Developers on their way to deliver a “brown envelope” to Ray Burke, he asked “will we get a receipt for this?”, the response paraphased only slightly was ” You will in your f**k!” My question is, “will we get corporation taxes paid in Ireland as a result of these companies registered in Dublin making so much profit”? You can take it the answer is similar to that received by John Gogarty.

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Irish citizens badly served by their Gov’t

People always make money in times of crisis. Some of the world’s most lasting fortunes have been accrued during recessions, depressions and even wars. It is just the way of things. We have seen it again in recent years in Ireland.

Just as international hedge funds profited by shorting our banks as the crisis escalated, a small number of global investment titans will, without doubt, make colossal fortunes acquiring distressed assets from those broken banks at knockdown prices.

The world of international finance which helped create the Irish bubble, has in turn profited from our country’s collapse and its recovery. When money is lost, it is also won. It is, after all, just the way of things.

Yet, the real issue is not with the people who have bought Ireland. Instead, it is with the people who have sold it. After all, it is the job of business to deliver profits and shareholder return. It is the job of government to regulate, to tax and to protect citizens. Somehow, Ireland’s policymakers managed to sell vast swathes of the country to a handful of vulture funds in a manner that left them broadly unregulated and largely untaxed. Should this be the way of things?

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For a number of months earlier this year, I worked on a television documentary on the flight of speculative capital into post-crash Ireland. The programme, The Great Irish Sell Off, was broadcast again last night. The response has surprised me. The production team has been contacted by an army of individuals whose loans – both personal and business debts – have been sold to vulture funds. Many had harrowing stories, and had, until the programme was broadcast, felt that they were alone.

But beyond the people directly involved, it has also led to broader debate about public policy. People are now discussing why so much was sold so quickly, and why so little tax has been paid on the upside. They are also asking if there was an alternative or another way.

The government has long maintained that there was not, and that offloading the toxic debts from the national balance sheet allowed bond yields to fall and Ireland to exit the bailout successfully. They also argue, not unreasonably, that the policy prescription was imposed by the troika.

Yet, in reality, the government made two key decisions that dramatically escalated the disposal strategy. The first was in early 2013, when the government liquidated the IBRC, the bank established to clean up the carcass of Anglo Irish Bank and Irish Nationwide Building Society.

This allowed the government to eradicate the dreaded promissory notes, but it also meant that €21.7 billion of assets would be auctioned off within a matter of months. When the bank was liquidated, the government thought as little as 10 per cent of this would be snapped up by cash rich international buyers.

In the end, they bought all but 10 per cent. The success owes much to the ingenuity of the special liquidators KPMG, but also showed the wall of money that was interested in Ireland – at a low price.

The second decision came later that year when Michael Noonan, the finance minister, asked Nama to examine fast-tracking its asset disposal timeline. The move came just months after vulture fund Lone Star cornered Noonan at the World Economic Forum in Davos and asked to buy all of Nama outright.

Noonan said no, but it planted a seed. A formal decision was made the following year when it was agreed Nama would offload much of its remaining loan book by the close of 2016, four years ahead of the original timeline. Again, this decision brought billions of euro in distressed debt to the market.

The government was conscious that other countries such as Spain would also try to sell toxic assets, and it wanted to capture as much of the foreign capital before it was lured elsewhere.

The strategy, however, also allowed Noonan and Fine Gael to tick some political boxes, and claim credit for shutting Anglo and calling time on Nama.

But those decisions had massive consequences and we are seeing this now. For a start, the expedited nature of the sales process meant that Nama, and to a lesser extent IBRC, has been forced to sell multibillion portfolios rather than smaller debt bundles. This limited the number of potential buyers to a handful of massive funds such as Lone Star, CarVal, Cerberus and Goldman Sachs.

It also meant that we were left unprepared for the arrival of such funds. This has been seen numerous times, and on each occasion, the government has been left playing catch-up. First, we saw the fact that many of the buyers of mortgages were unregulated and outside the scope of the Central Bank. Many have signed up to a code of conduct, while intermediaries are now regulated. The owners of the mortgages, however, remain unregulated.

Second, we saw it in the case of Tyrrelstown, whereby a deal between the developer of an estate and Goldman Sachs resulted in eviction letters sent to 40 tenants. This exposed Ireland’s lack of rental security.

We have also seen it in terms of tax. As our programme revealed, 25 subsidiaries of vulture funds paid less than €18,000 in tax on assets of close to €20 billion, with an estimated loss to the exchequer of €700 million.

Vulture funds were ready for Ireland. Yet Ireland, despite courting them heavily, was not prepared for vulture funds.

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This is not a debate about sovereignty in a “who really owns Ireland” manner. Yes, it is about where the profits go, what these assets are used for, and how these assets are taxed. But ultimately it is a problem we will still be dealing with in 20 years’ time. That is the legacy of bad policy, poor vision – the missed opportunity that led to worse outcomes for our citizens.

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Brexit..Hard or Soft is a problem

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Ireland’s housing crisis

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Odd bits from Wednesday’s Press

Trump, meanwhile, faces bipartisan opposition to his budget plans to take from the poor and give to the wall. The president wants to reduce spending by $3.6tn – slashing everything from Medicaid to Meals on Wheels – while putting an extra $2.6bn into border security including the Mexico barrier. Powerful Republicans are against it. Harold Rogers said: “The cuts are draconian.” John McCain declared Trump’s proposals were “dead on arrival”.
Today’s Good News
Unemployment dropped below 7%
Figures released yesterday show that the labour market continued to improve in the first three months of this year, with the number of people at work rising by more than economists had expected – by 68,000 – and the unemployment rate dropping below 7 per cent for the first time since August 2008.
Facebook Files – The social network lets users spread Holocaust denial even where it’s illegal, if it can get away with it, we reveal today in our continuing investigation. Here are Facebook’s own instructions to its moderators on the subject (warning: disturbing content). And according to one internal source, Islamist extremists are getting around restrictions because moderators only have 10 seconds to decide whether to delete a post. In doing so they are supposed to refer to a manual that is 44 pages long and contains names and faces of 646 terrorist leaders and their groups. “Mission impossible,” says the insider.
Young children’s maths, English and communication skills improve if they use iPads in school on a regular basis.
That is one of the key findings of the most in-depth research of its kind ever carried out in Northern Ireland.
The study – Mobile Devices in Early Learning – was carried out over two years and involved about 650 pupils in five Belfast primary schools and five nursery schools.
Schools which took part were in some of the most deprived areas of the city.
They were each supplied with sets of iPads for nursery, primary one, primary two and primary three classes.
Researchers from Stranmillis University College then assessed how pupils, parents, principals and teachers used them over the course of two years.
Among their key findings were that:
■ The introduction of digital technology has had a positive impact on the development of children’s literacy and numeracy skills
■ Contrary to initial expectations, principals and teachers report that the use of ipads in the classroom has enhanced children’s communication skills
■ Children view learning using handheld devices as play and are more highly motivated, enthused and engaged
■ Boys appear to be more enthused when using digital technology, particularly when producing pieces of written work
IPads helped young children to be more motivated and engaged in class, said Dr Colette Gray from Stranmillis, who was one of the study’s authors.
The ratings agency Moody’s has downgraded China’s debt and said it expects the country’s financial strength to erode in the coming years despite reform. The downgrade – China’s first since 1989 – pushed the yuan lower but also hit the Australian dollar, which is closely linked to the fortunes of the Chinese economy. 
Moody’s may consider China’s rampant debt a problem but its consumers are still going strong. They helped Jaguar LandRover sell 32% more vehicles in China last year, the UK-based manufacturer said, as it recorded global sales of more than 600,000.
The pound was buying $1.297 and €1.159 overnight.

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