Barbados and Canada sign amended air accord
The governments of Barbados and Canada Tuesday signed a reciprocal air transport agreement, which gives designated carriers from both countries “the flexibility to operate without directional or geographical limitations”. Minister of Foreign Affairs and Foreign Trade Senator Maxine McClean, who initialed the agreement at her Ministry’s Culloden Road, St Michael offices, along with Canada’s High Commissioner Marie Legault, said the accord should also redound to increased airlift and more long stay visitors from Canada, which is the island’s single largest source market for international business. “The evidence is there that there is a renewed commitment on both our parts to ensure not only that our visitor arrivals increase, but also to facilitate the business transactions that take place between our countries,” McClean said. The new pact replaces the original air services agreement signed between Barbados and Canada in 1985. High Commissioner Legault agreed with Senator McClean that air connectivity was crucial to the promotion of trade and investment between the two countries. “In 2013, 50,000 people came just with Air Canada and in three years we were able to increase that to 81,000 people . . . and it’s increasing every year. So, an instrument like this is essential to make sure there are no barriers between our countries,” Legault said.
Creditors ask court to limit Puerto Rico’s authority over its bank account
OppenheimerFunds, Franklin Advisers, Inc., and the First Puerto Rico Family of Funds asked Judge Laura Taylor Swain on Monday to limit the limit the authority of the banks in which the government has its accounts to continue honoring transfers, deposits and withdrawals. “Any order entered in connection with the Bank Transaction Motion must avoid providing banks with broad releases of liability,” the creditors said. The petition is contained in a motion in which the entities are objecting the government’s motions on how its bankruptcy process should be managed. The entities are holders of bonds from Puerto Rico and its instrumentalities. The Family of Funds are holders of over $3.5 billion in bonds from the Sales Tax Financing Corp. (Cofina by its Spanish acronym), and over $3.6 billion of other uninsured bonds issued by the Commonwealth and other territorial instrumentalities, including over $1.8 billion in uninsured Commonwealth general obligation bonds, making them one of the largest creditor group. The Commonwealth of Puerto Rico and Cofina by and through the Financial Oversight & Management Board for Puerto Rico had asked the court for an order confirming the authority of their banks to continue honoring all transactions without incurring in liability days after filing for Title III bankruptcy. The creditors said provisions that appear to insulate the banks from virtually any form of liability so long as they are acting in response to the government’s instructions, must be stricken or narrowed. “An order meant to provide comfort that section 363 does not apply should not mislead a Bank into believing that it is relieved of existing obligations or duties, and any resulting liability therefore,” they said. They noted that Promesa provides that if property is transferred in violation of a pledge, the transferee is liable for the transfer. “A bank which serves as an intermediate transferee may be liable under Promesa. This is an issue which should be resolved after a full and fair opportunity to be heard, not as part of a first-day administrative order,” they said.
Uganda: How tax incentives can make or break an economy
Tax incentive is an exemption from a tax liability, offered as an enticement to engage in a specified activity such as an investment for a certain period, reports New Vision. Governments argue that tax incentives stimulate employment and development by making the country competitive as a destination for foreign investment. However, tax incentives have doubled-edged impacts on the economy. The measures may not only promote trade or particular sectors in the economy but will also result into revenue loss. Research suggests that developing countries do not need to grant tax incentives and exemptions to attract Foreign Direct Investment (FDI). Because the decision to invest is largely based on the country’s overall investment climate. This view is emphasised in a 2012 study conducted by SEATINI-Uganda which established that tax incentives appear to have a contradictory impact on the economy. For example, in the year 2009/10, tax exemptions resulted into a direct loss of 3.99% tax to GDP ratio. Without the exemptions, the tax to GDP ratio would have reached a level of 16.15%, according to the Ministry of Finance, Planning and Economic Development report of 2011. The International Monetary Fund (IMF) has discovered that some of the tax incentives and exemptions that Government is granting are unhealthy for the economy, and has continuously encouraged government to reduce tax incentives. At the start of 2017, the media has been awash with reports of the amount of tax that government has paid in respect to the tax exemptions. This year the Government will spend sh77b to pay taxes for Bidco Oil Refineries Ltd, Aya Investments Ltd, Steel and Tube, Cipla Quality Chemicals, Uganda Electricity Generation Company Ltd and Uganda Electricity Transmission Company Ltd. This is as a result of tax exemptions/incentives given to these companies. The amount of money being paid in taxes for these companies could do boost sectors like trade that have been allocated a dismal sh94.39b which amounts to 0.4% of the sh28,252.5 trillion National Budget FY2017/18. Tax incentives and exemptions equals to tax foregone and ultimately has to be paid by someone else. Parliament needs to review Article Section 77(1)-(2), of the Public Finance Management Act (PFMA), 2015, which allows the responsible minister to award tax exemptions and there after report and justify the award to Parliament. This limits parliament oversight role before exemptions and incentives are awarded. Therefore, there needs to be a more transparent approach of giving incentives and exemptions which would provide for more scrutiny and debate by decision makers and all stakeholders. Government and civil society need to conduct a comparative cost benefit analysis of all tax exemptions/incentives that have been given thus far to ascertain whether they have benefitted the country. Most importantly is, the Government of Uganda should withdraw all tax incentives it has given and have not served their intended purpose. Article compliments IFC Review.