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Charitable pledges update

August 12th, 2005

Nicola’s one per cent pledge needs only one more signatory to come into effect. Here’s you chance to be decisive!

Meanwhile, my Niger famine appeal has raised $500 ($250 from generous readers, and a matching amount from me). It runs until Sunday, so there’s plenty of time to check the lounge cushions for a cache of lost gold coins or whatever.

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  1. imogen
    August 12th, 2005 at 16:35 | #1

    Nicola just got over the line.

  2. jquiggin
    August 12th, 2005 at 16:37 | #2

    Well done, Imogen!

  3. Terje
    August 14th, 2005 at 17:05 | #3

    Meanwhile the government of Niger will take 50% of any income that somebody in Niger earns in excess of US$16 per week.

    Taxed to death in literal terms.

    In April they even had the audacity to increase the general VAT in the midst of a famine.

  4. Ian Gould
    August 14th, 2005 at 17:59 | #4

    What proportion of the population of Niger do you think has an income of more than $16 per week?

    Also can you explain exactly how, now, today, the Niger government should come up with other sources of revenue to pay for emergency relief?

    Which is more important, feeding the starving or tax cuts?

    (Remember we’re talking here about the immediate priorities not abstract philosophical or political points or long-term economci developemnt priorities.)

  5. Terje
    August 15th, 2005 at 21:20 | #5

    I said US$16 per week. I meant A$16.

    With a tax rate of 50% I would guess that very few manage to accumulate enough capital or to trade effectively with their neighbours (given the near 100% tariff on such trade) in order to life themselves out of poverty. Most of them probably continue to earn little more than A$16 per week.

    If you are starving the immediate priority is to find food. However I doubt that the government is starving so a tax cut would be a wise and overdue reform. It would not help at this instance but it would help mitigate the effects next time.

  6. Terje
    August 15th, 2005 at 21:22 | #6

    I understand that in April this year the government of Niger increased the VAT. It caused riots and the government subsequently backed down.

  7. Ian Gould
    August 16th, 2005 at 09:39 | #7

    >

    The government already receives more than half its annual budget in the form of aid and is facing large new spending to assist the famine victims. so in fiscal terms it is starving.

    A$16 or US$16 doesn’tmatter = both are far more than the vast majority of subsistence farmers will ever make in a week. Given the opportunity to earn enough to pay that 50% tax rate, they’d probably weep tears of joy.

    You’re correct that in the long term developing the free market economy is the way to produce real change in Niger but that will require not only private investment it will also require substantial public investment – you need roads to get crops to markets; you need schools to produce literate workers.

  8. Terje
    August 16th, 2005 at 14:41 | #8

    In Niger capital gains tax is equal to income tax.

    So in practical terms both are 50%.

    What investor (domestic or foreign) is going to invest serious dollars in any Niger infastructure under these terms?

    The reality of growth is that some people move up first. Like a rope that is laying on the ground and being picked up at one end the improvement in altitude is uneven. Whilst some may weep at the opportunity to pay the 50% tax I think it more likely that the tax itself ensures that few of them ever will.

    Prohibitive tax rates do not even help governments. They suffocate the growth that would allow for revenues to increae.

    The government of Niger has through a lack of wisdom ensured that the nation will never prosper. Myopic advisors from the west have no doubt helped them along the way.

    In Ethiopia it is the same. A farmer in Ethiopia who earns more than US$4000 per annum (about A$100 per week) faces a marginal tax rate of 89%. Amazingly stupid tax policy.

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