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Why you should expect to pay more tourist taxes – even though the evidence for them is unclear

<a href="https://theconversation.com/profiles/rhys-ap-gwilym-1531623">Rhys ap Gwilym</a>, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> and <a href="https://theconversation.com/profiles/linda-osti-1431286">Linda Osti</a>, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> In April 2024, Venice began its controversial experiment to <a href="https://www.timeout.com/news/venice-will-charge-tourists-5-to-enter-the-city-from-next-year-090823">charge day trippers</a> €5 (£4.30) to visit the city on some of the busiest days of the year. But it’s not just the lagoon city, with its <a href="https://www.bbc.co.uk/travel/article/20230928-venices-new-5-entry-fee-explained#:%7E:text=Over%20the%20past%20three%20decades%2C%20Venice%20has%20become,thirds%20of%20visitors%20come%20just%20for%20the%20day.">30 million visitors</a> a year which is interested in trying out new tourism taxes. In the UK, a council in the county of Kent <a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Ftheconversationuk.cmail20.com%2Ft%2Fr-l-tiuhhult-iukktlluuk-o%2F&data=05%7C02%7Cr.a.gwilym%40bangor.ac.uk%7C39ac5db833674c1a026508dc63a24fa7%7Cc6474c55a9234d2a9bd4ece37148dbb2%7C0%7C0%7C638494795990617858%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=D6oVizx3pFoiwRaTcKaakQ079%2FIQx86jcbFpj2%2FS0RQ%3D&reserved=0">has recommended</a> introducing a tourism tax on overnight stays in the county. In Scotland, it seems likely that <a href="https://edinburgh.org/planning/local-information/visitor-levy-for-edinburgh/#:%7E:text=The%20Edinburgh%20Visitor%20Levy%2C%20otherwise%20referred%20to%20as,would%20then%20be%20invested%20back%20into%20the%20city.">visitors to Edinburgh</a> will be paying a fee by 2026, and the Welsh government <a href="https://www.walesonline.co.uk/news/wales-news/welsh-government-announces-tourists-pay-26591498">plans to introduce</a> similar legislation later this year. Such taxes may seem new to the UK, but there are more than 60 destinations around the world where this type of tax is already in place. These vary from a nationwide tax in Iceland to various towns across the US. Some have been in place for a long time (France was the <a href="https://www.impots.gouv.fr/taxe-de-sejour">first in 1910</a>), but most were introduced during the last decade or two. Before the pandemic really struck (and tourism was put on hold), 2020 was described by one newspaper as the <a href="https://www.telegraph.co.uk/travel/news/tourist-tax-amsterdam-venice/">“year of the tourist tax”</a>, as Amsterdam joined an ever-growing list of destinations, which includes Paris, Malta and Cancun, to charge visitors for simply visiting. Introducing these tourist taxes has often been controversial, with industry bodies <a href="https://www.bbc.co.uk/news/uk-wales-62707152">voicing concerns</a> about the potential impacts on the tourist trade. And it appears that the link between such levies and visitor numbers is not simple, with several studies reaching different conclusions. For example, some have suggested that tourism levies have hindered <a href="https://www-sciencedirect-com.bangor.idm.oclc.org/science/article/pii/S0261517704000238">international tourism in the Balearics</a> and <a href="https://journals-sagepub-com.bangor.idm.oclc.org/doi/pdf/10.1177/00472875211053658">the Maldives</a>, and that they may dissuade people from participating in <a href="https://eprints.bournemouth.ac.uk/35087/1/ADEDOYIN%2C%20Festus%20Fatai_Ph.D._2020.pdf">domestic tourism</a>. Yet in one of the world’s most popular tourism spots with a levy, Barcelona, visitor numbers have <a href="https://groupnao.com/wp-content/uploads/2020/11/TOURISM-TAXES-BY-DESIGN-NOV12-2020_rettet-compressed-2.pdf">consistently risen</a>, with hotel guests increasing from 7.1 million in 2013 to 9.5 million in 2019. In fact, the relationship between a visitor levy and tourist flow is so complex that there is no unified view, even within the same country. Italy has been one of the most studied, and results <a href="https://crenos.unica.it/crenosterritorio/sites/default/files/allegati-pubblicazioni-tes/Indagine_Villasimius_Quaderno_Crenos_ISBN.pdf">are inconsistent</a> <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/jtr.2123">there too</a>. Another study, looking at three neighbouring Italian seaside spots finds that only in one destination has the visitor levy <a href="https://www.rivisteweb.it/doi/10.1429/77318">reduced tourist flow</a>. And a study on the Italian cities of Rome, Florence and Padua shows that these cities <a href="https://link-springer-com.bangor.idm.oclc.org/chapter/10.1007/978-3-030-61274-0_23">have not experienced any negative effects</a> either in terms of domestic or international demand. So the impact of tourism taxes on visitor numbers is inconclusive. But what about other effects, such as the potential benefits of spending the revenues raised? As part of an ongoing research project, we looked at seven different destinations in which tourist taxes are levied to look at how the money raised is then spent. For most places, tourism tax revenues were being used to fund marketing and branding – so invested directly into promoting more tourism. The income was also commonly used to fund tourism infrastructure, from public toilets and walking or cycling paths to a multi-billion dollar <a href="https://www.occc.net/About-Us-Media-Relations-Press-Releases/ArticleID/569/Orange%20County%20Board%20Votes%20to%20Approve%20Convention%20Center%20Completion%20with%20Tourist%20Development%20Tax%20Revenues">convention centre</a> in Orange County, Florida. In <a href="https://www.caib.es/sites/impostturisme/en/l/projects/?mcont=95762">the Balearics</a>, revenues tend to go to projects that mitigate the negative impacts of tourism on the environment, culture and society of the islands. These include waste management, conserving natural habitats and historical monuments, and social housing. But in general, tourism taxes have been implemented successfully across the destinations we looked at, and there is little evidence of tourists being put off from visiting. Research also suggests that when tourists are told what the levy is used for – and when it relates directly to <a href="https://www.mdpi.com/2227-7099/5/2/21">improving their experience</a> or <a href="https://ejtr.vumk.eu/index.php/about/article/view/2813/605">enhancing sustainable tourism</a> – <a href="https://www-sciencedirect-com.bangor.idm.oclc.org/science/article/pii/S2212571X20301621?casa_token=HcD-yQh65XcAAAAA:GhVRo4vX9JY1E3Lcx5ZPaTr5ZHArMGNrmK_2ASJCtMPjVpdCQLdun25BmFEYquGgz8-1riOWdg">tourists are willing to accept and pay</a> the levy. <h2>Day trippers</h2> For many tourism destinations, the major problem is not overnight tourists, but rather <a href="https://www.mirror.co.uk/news/uk-news/fuming-snowdonia-visitors-demand-self-30203642">day visitors</a> who use local resources while making little in the way of a financial contribution. For these reasons, taxes might also be used to deter day visits and instead encourage longer stays. <a href="https://www.economist.com/why-venice-is-starting-to-charge-tourists-to-enter?utm_medium=cpc.adword.pd&utm_source=google&ppccampaignID=18156330227&ppcadID=&utm_campaign=a.22brand_pmax&utm_content=conversion.direct-response.anonymous&gad_source=1&gclid=Cj0KCQjw_qexBhCoARIsAFgBleshST3IQMYR8hONLSLnA_loj9dukAqxURhdVCn1RmGeD5iOQzw_r2caAsqrEALw_wcB&gclsrc=aw.ds">Venice is at the forefront</a> of this shift. And in April 2024, after long discussions between the local authority, residents and business owners, Venice started a <a href="https://cdamedia.veneziaunica.it/en/video/it-is-difficult-to-book-a-visit-to-venice/">trial</a> of a day visitor tax (a so-called <a href="https://cda.veneziaunica.it/en">“access fee”</a>). Back in Kent, it may take longer for any such radical plans to come to fruition. In contrast to Scotland and Wales, there are currently no national plans to <a href="http://www.parliament.uk/written-questions-answers-statements/written-question/commons/2023-09-13/199425">introduce tourist taxes</a> in England. This might be considered shortsighted, given the dire need of many destinations in England to improve local infrastructure that tourists rely on, including <a href="https://www.reading.ac.uk/news/2024/Research-News/Swimming-in-sewage-Bathing-forecasts-not-keeping-people-safe">clean bathing water</a> and <a href="https://www.lancs.live/news/cumbria-news/lake-district-warning-parking-issues-27173650">public transport</a>. In <a href="https://www.accountingweb.co.uk/business/finance-strategy/manchester-acts-as-trailblazer-for-tourist-tax">Manchester</a> and <a href="https://www.ft.com/content/0e0385e6-29ec-4302-9903-6fbf63d8854a">Liverpool</a>, businesses have implemented voluntary overnight charges on visitors, in the absence of the statutory basis to implement compulsory levies. Many other English towns and cities will probably follow their lead. Tourism taxes are something we might all have to consider budgeting for in our future travel plans, wherever we choose to visit.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/229134/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/rhys-ap-gwilym-1531623">Rhys ap Gwilym</a>, Senior Lecturer in Economics, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> and <a href="https://theconversation.com/profiles/linda-osti-1431286">Linda Osti</a>, Senior Lecturer in Tourism Management, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/why-you-should-expect-to-pay-more-tourist-taxes-even-though-the-evidence-for-them-is-unclear-229134">original article</a>.

Travel Trouble

"There's no way": Man receives $52 billion tax bill

An American man has been left confused after receiving a letter from the government claiming he owed $52 billion in unpaid taxes. Barry Tangert got two letters in the mail from the state of Pennsylvania, opening the first to find a refund check from the federal government for over $900. His joy was short-lived though as he opened the second letter to find the income billing notice from the Pennsylvania Department of Revenue claiming that he owed a jaw-dropping $52,950,744,735.28 ($34,576,826,561.47 AUD). “I knew it was an obvious blunder. I don’t even make over $100,000 a year, so there’s no way I could owe anywhere near that,” Barry Tangert told local outlet News 8. The total sum was so large it didn’t even fit on a single line on the document. Tangert immediately knew it was a mistake, with the astonishing number being more than triple the $11 billion America’s richest man Elon Musk says he owed the government in 2022. How the error made it all the way to his doorstep is still a mystery to Tangert. “I don’t know if it was a computer glitch in the transmission or if it was an input error from my tax preparer,” Tangert said, noting that his tax preparer filed an amendment after noticing an error on his 2022 return. He reached out to the Pennsylvania Department of Revenue’s customer service line, which also provided little help to the baffled man. “The first thing he said was, ‘You had a good year.’ And I said, ‘I wish,’” Tangert said. Fortunately, the state department has since resolved the issue, which it chalked up to wrong numbers simply being put into the system. Image credits: WGAL News 8

Money & Banking

"Proud to pay more": The billionaires who want to pay more tax

Over 250 millionaires and billionaires have issued an <a href="https://proudtopaymore.org/" target="_blank" rel="noopener">open letter</a> to global leaders encouraging them to implement wealth taxes to combat the cost-of-living crisis. This comes just as a report by the Oxfam Charity revealed that the global wealth of billionaires have only grown in the last three years despite inflation. The open letter, signed by super-rich individuals from 17 countries, includes signatories like Abigail Disney, the grand-niece of Walt Disney, Succession actor Brian Cox, and American philanthropist and Rockefeller family heir Valerie Rockefeller. They said that they would be "proud to pay more taxes" in order to address the inequality. "Elected leaders must tax us, the super rich," the letter read. "This will not fundamentally alter our standard of living, nor deprive our children, nor harm our nations' economic growth. "But it will turn extreme and unproductive private wealth into an investment for our common democratic future." Austrian heir Marlene Engelhorn is also among the voices demanding that they pay more in taxes. "I've inherited a fortune and therefore power, without having done anything for it. And the state doesn't even want taxes on it," Engelhorn, who inherited millions from her family who founded chemical giant BASF, said. The letter was released just as global leaders gather in Davos, Switzerland for the World Economic Forum. Abigail Disney, whose net-worth is measured at more than $100 million, said that lawmakers need to come together to make a meaningful economic and social change. "There's too much at stake for us all to wait for the ultra rich to grow a conscience and voluntarily change their ways," she said. "For that reason, lawmakers must step in and tax extreme wealth, along with the variety of environmentally destructive habits of the world's richest." A recent <a href="https://static1.squarespace.com/static/63fe48c7e864f3729e4f9287/t/6596bfb943707b56d11f1296/1704378297933/G20+Survey+of+those+with+More+than+%241+million+on+Attitudes+to+Extreme+Wealth+and+Taxing+the+Super+Rich.pdf" target="_blank" rel="noopener">survey</a> of almost 2400 millionaires found that 74 per cent of them supported the introduction of a wealth tax to fund improved public services and deal with the cost-of-living crisis. The open letter also said that one-off donations and philanthropy "cannot redress the current colossal imbalance" of societal wealth. "We need our governments and our leaders to lead," the letter said. "The true measure of a society can be found, not just in how it treats its most vulnerable, but in what it asks of its wealthiest members." Images: Getty

Money & Banking

Ping, your pizza is on its way. Ping, please rate the driver. Yes, constant notifications really do tax your brain

A ping from the pizza company. A couple of pings from your socials. Ping, ping, ping from your family WhatsApp group trying to organise a weekend barbecue. With all those smartphone notifications, it’s no wonder you lose focus on what you’re trying to do do. Your phone doesn’t even need to ping to distract you. There’s <a href="https://psycnet.apa.org/record/2015-28923-001">pretty good</a><a href="https://www.journals.uchicago.edu/doi/full/10.1086/691462">evidence</a> the mere presence of your phone, silent or not, is enough to divert your attention. So what’s going on? More importantly, how can you reclaim your focus, without missing the important stuff? <h2>Is it really such a big deal?</h2> When you look at the big picture, those pings can really add up. Although estimates vary, the average person checks their phone <a href="https://irep.ntu.ac.uk/id/eprint/30085/1/PubSub7601_Andrews.PDF">around 85 times</a><a href="https://www.theage.com.au/national/victoria/trapped-in-the-net-are-we-all-addicted-to-our-smartphones-20190531-p51t44.html">a day</a>, roughly once every 15 minutes. In other words, every 15 minutes or so, your attention is likely to wander from what you’re doing. The trouble is, it can take <a href="https://lifehacker.com/how-long-it-takes-to-get-back-on-track-after-a-distract-1720708353">several minutes</a> to regain your concentration fully after being <a href="https://www.ics.uci.edu/%7Egmark/chi08-mark.pdf">interrupted</a> by your phone. If you’re just watching TV, distractions (and refocusing) are no big deal. But if you’re driving a car, trying to study, at work, or spending time with your loved ones, it could lead to some fairly substantial problems. <h2>Two types of interference</h2> The pings from your phone are “exogenous interruptions”. In other words, something external, around you, has caused the interruption. We can <a href="https://link.springer.com/chapter/10.1007/978-3-319-46276-9_21">become conditioned</a> to feeling excited when we hear our phones ping. This is the <a href="https://onlinelibrary.wiley.com/doi/full/10.1046/j.1360-0443.2002.00015.x">same pleasurable feeling</a> people who gamble can quickly become conditioned to at the sight or sound of a poker machine. What if your phone is on silent? Doesn’t that solve the ping problem? Well, no. That’s another type of interruption, an internal (or endogenous) interruption. Think of every time you were working on a task but your attention drifted to your phone. You may have fought the urge to pick it up and see what was happening online, but you probably checked anyway. In this situation, we can become so strongly conditioned to expect a reward each time we look at our phone we don’t need to wait for a ping to trigger the effect. These impulses are powerful. Just reading this article about checking your phone may make you feel like … checking your phone. <h2>Give your brain a break</h2> What do all these interruptions mean for cognition and wellbeing? There’s increasing evidence push notifications are associated with <a href="https://www.sciencedirect.com/science/article/pii/S2352853217300159">decreased productivity</a>, <a href="https://www.sciencedirect.com/science/article/pii/S2451958820300051">poorer concentration</a> and <a href="https://www.sciencedirect.com/science/article/abs/pii/S0927537116300136">increased distraction</a> at work and school. But is there any evidence our brain is working harder to manage the frequent switches in attention? One study of people’s brain waves <a href="https://www.hindawi.com/journals/cin/2016/5718580/">found</a> those who describe themselves as heavy smartphone users were more sensitive to push notifications than ones who said they were light users. After hearing a push notification, heavy users were significantly worse at recovering their concentration on a task than lighter users. Although push notification interrupted concentration for both groups, the heavy users took much longer to regain focus. Frequent interruptions from your phone can also leave you <a href="https://www.sciencedirect.com/science/article/abs/pii/S0747563219302596">feeling stressed</a> by a need to respond. Frequent smartphone interruptions are also associated with <a href="https://www.sciencedirect.com/science/article/pii/S0360131519301319">increased FOMO</a> (fear of missing out). If you get distracted by your phone after responding to a notification, any subsequent <a href="https://journals.sagepub.com/doi/pdf/10.1177/2050157921993896">procrastination</a> in returning to a task can also leave you feeling guilty or frustrated. There’s <a href="https://www.sciencedirect.com/science/article/pii/S0747563219300883">certainly evidence</a> suggesting the longer you spend using your phone in unproductive ways, the lower you tend to rate your wellbeing. <h2>How can I stop?</h2> We know switching your phone to silent isn’t going to magically fix the problem, especially if you’re already a frequent checker. What’s needed is behaviour change, and that’s hard. It can take several attempts to see lasting change. If you have ever tried to quit smoking, lose weight, or start an exercise program you’ll know what I mean. Start by turning off all non-essential notifications. Then here are some things to try if you want to reduce the number of times you check your phone: <ul> <li> charge your phone overnight in a different room to your bedroom. Notifications can prevent you falling asleep and can repeatedly rouse you from essential sleep throughout the night </li> <li> interrupt the urge to check and actively decide if it’s going to benefit you, in that moment. For example, as you turn to reach for your phone, stop and ask yourself if this action serves a purpose other than distraction </li> <li> try the <a href="https://www.themuse.com/advice/take-it-from-someone-who-hates-productivity-hacksthe-pomodoro-technique-actually-works#:%7E:text=The%20Pomodoro%20Technique%20is%20a,are%20referred%20to%20as%20pomodoros">Pomodoro method</a> to stay focused on a task. This involves breaking your concentration time up into manageable chunks (for example, 25 minutes) then rewarding yourself with a short break (for instance, to check your phone) between chunks. Gradually increase the length of time between rewards. Gradually re-learning to sustain your attention on any task can take a while if you’re a high-volume checker. </li> </ul> Image credits: Getty Images This article originally appeared on <a href="https://theconversation.com/ping-your-pizza-is-on-its-way-ping-please-rate-the-driver-yes-constant-notifications-really-do-tax-your-brain-193952" target="_blank" rel="noopener">The Conversation</a>.

Technology

Five expensive (but avoidable) financial mistakes

The road to financial freedom can have many potholes but knowing how to avoid them is simple if you know what to do. Here’s some tips on what to look out for. When it comes to your retirement, planning is crucial. The first step, however, is understanding how to make the most of your financial position by avoiding the mistakes many people make when it comes to planning for the future. Here’s a few tips from wealth management firm BT Financial Group on how to avoid the speed bumps you may find along your financial journey. Too little too late The government has deliberately set up the superannuation system to favour those who start early and stay on track. Those who leave it to the last minute often do so at their own peril. Start as soon as possible and map out your road to financial freedom. Pay unnecessary taxes There are many simple, legal ways to make sure you’re not paying more tax than you need. Check with your financial planner or accountant if you’re making the most of the tax incentives offered by the government. Fall for investment fads This probably poses the greatest single danger to your prosperity. Technology stocks in the late 1990s and speculative miners in the late 2000s were very tempting when they were rising fast. Your best weapon against this temptation is to develop a disciplined investment plan and stick with it. It won’t happen to me Wealth management is just as much about protecting your assets as it is about building wealth. Make sure you have a “Plan B” to pay off your house and look after your family if you were to die or be permanently unable to work. Your ability to earn money is actually your most valuable asset, so it’s vital to protect that asset with income protection insurance. Fail to plan As the old adage goes, “if you fail to plan, you plan to fail”. If you can articulate your goals and visualise what achieving those goals looks like, you are well on your way to achieving them. Write down your three most important goals and keep them in a safe place to review at least once a year.

Money & Banking

Climate change: the fairest way to tax carbon is to make air travel more expensive

Despite the fact that poorer people generally <a href="https://doi.org/10.1017/sus.2020.12">have lower emissions</a>, taxes on the carbon dioxide (CO₂) our activities emit tend to affect people on low incomes <a href="https://iopscience.iop.org/article/10.1088/1748-9326/ac2cb1">more</a> than richer people. Having less money means you can ill afford a switch to an untaxed alternative, like an electric car, or pay for carbon-saving measures like home insulation. You are also more likely to struggle to use less of an essential good like petrol or gas for heating, even if the price goes up. Carbon taxes on energy that people use in their homes – for heating, cooking or watching TV – charge consumers for the emissions per kilowatt-hour (kWh) of electricity, gas or oil used. Economists would say that these kinds of carbon taxes are <a href="https://doi.org/10.1088/1748-9326/ac2cb1">regressive</a>, because using energy to heat and power your home is a necessity and poorer people will use a much higher share of their income to pay for these things – and the taxes – than richer people. While total emissions have been <a href="https://www.nature.com/articles/s41558-019-0419-7">falling</a> in several rich countries over the last few years, emissions from cars and other means of transport are <a href="https://doi.org/10.1088/1748-9326/abee4e">growing</a>. The rise in air travel emissions has been especially rapid: a roughly <a href="https://doi.org/10.1016/j.atmosenv.2020.117834">sevenfold increase</a> between 1960 and 2018 globally. What’s more, the fuels for heating and powering homes or driving cars are taxed, but the fuel airlines use is exempt due to <a href="https://theconversation.com/how-a-1940s-treaty-set-airlines-on-a-path-to-high-emissions-and-low-regulation-148818">an international agreement</a> from 1944. And although Europeans generally <a href="https://www.sciencedirect.com/science/article/pii/S095937801831238X?via%3Dihub">disapprove</a> of carbon taxes, <a href="https://www.tandfonline.com/doi/full/10.1080/09669582.2022.2115050">our study</a> has revealed one type which could prove popular. In the first analysis of its kind to consider the effect on different income bands, we found that carbon taxes on air travel – what we describe as luxury emissions – nearly always affect the rich more. <h2>Tax burdens from air travel</h2> Our research examined how the burden from four different taxes on air travel would fall across income groups in the UK. It shows that all of these taxes are progressive: they burden richer people more than poorer people as a proportion of income. This is because people on higher incomes are <a href="https://doi.org/10.1016/j.tbs.2021.05.008">much more likely to fly</a>, and fly more often. Air travel taxes that apply to passengers could be levied on the emissions of each passenger per flight. People could also be taxed according to the distance they travel, or their seat class. An aeroplane’s economy class occupies the least space per person, while business- and first-class passengers take up more room and so are responsible for more emissions than the average passenger. A person could also be taxed for the number of flights they take. A <a href="https://afreeride.org/">frequent flyer levy</a> would exempt the first return flight a person takes in a year, but would tax subsequent flights at an increasing rate. We found that taxes that take both flight emissions and the number of flights per passenger into account distribute the tax burden fairest. The reason for this is that frequent air travel (all flights after the first return flight) is even more unequally distributed in society: the top 10% of emitters are responsible for 60.8% of flight emissions but for 83.7% of emissions from frequent flights. Who else except the wealthy is likely to be affected by taxes on air travel? We found that, in the UK, university graduates, employed people, young and middle-aged adults, residents of London, as well as first- and second-generation migrants are also more likely to fly than their counterparts, regardless of income. Our results showed that recent migrants with friends and family abroad are relatively likely to fly often, even when on a low income. So allowances or extra support for recent migrants could make the design of such taxes fairer. Overall, taxes on air travel are far more socially just than taxes on necessities such as home energy use and could curb luxury emissions in a way that nurtures broad support for more sweeping decarbonisation measures such as those designed to limit car travel, like <a href="https://www.nature.com/articles/s41560-022-01057-y">expanding bus and cycling lanes</a>. So why do politicians and others claim, as former UK treasury minister Robert Jenrick did in 2019, that air travel taxes <a href="https://www.thesun.co.uk/news/8128492/labour-holiday-tax-family-break/">disproportionately hit the poor</a>? It’s possible that they underestimate how little people in low-income groups actually fly, perhaps due to their typically middle- and upper-class backgrounds. A less charitable interpretation is that they have ulterior motives for opposing such taxes. Social scientists claim that exaggerating or misrepresenting the social justice consequences of environmental policy is one of the most common <a href="https://theconversation.com/climate-denial-hasnt-gone-away-heres-how-to-spot-arguments-for-delaying-climate-action-141991">arguments </a>used to stall vital action on climate change. Image credits: Getty Images This article originally appeared on <a href="https://theconversation.com/climate-change-the-fairest-way-to-tax-carbon-is-to-make-air-travel-more-expensive-191632" target="_blank" rel="noopener">The Conversation</a>.

Travel Tips

“Truly grotesque”: Ivana Trump’s golf course burial may help Trump get tax breaks

Ivana Trump, who <a href="https://www.oversixty.co.nz/news/news/ivana-trump-s-cause-of-death-revealed" target="_blank" rel="noopener">passed away</a> aged 73 in her New York home in mid-July, has been buried on the grounds of her ex-husband Donald Trump’s golf club - and the choice of burial plot may grant the former US president some long-sought tax breaks. Ivana is the first person known to have been buried at Trump National Golf Club in Bedminster, New Jersey, a state where land taxes are notoriously high. But, cemetery land is exempt from all taxes, rates and assessments, with the <a href="https://www.theguardian.com/us-news/2022/jul/31/donald-ivana-trump-cemetery-golf-course-taxes" target="_blank" rel="noopener">Guardian</a> reporting that Ivana’s grave would therefore have “advantageous tax implications”. According to <a href="https://projects.propublica.org/nonprofits/organizations/465718872" target="_blank" rel="noopener">documents</a> published by ProPublica, the Trump family trust has previously sought to classify a nearby property in Hackettstown, New Jersey, as a cemetery company. Brooke Harrington, a professor of sociology at Dartmouth College, tweeted that she investigated claims that the placement of Ivana’s grave would benefit Trump. <blockquote class="twitter-tweet"> As a tax researcher, I was skeptical of rumors Trump buried his ex-wife in that sad little plot of dirt on his Bedminster, NJ golf course just for tax breaks. So I checked the NJ tax code & folks...it's a trifecta of tax avoidance. Property, income & sales tax, all eliminated. <a href="https://t.co/VDZBlDyuhQ">pic.twitter.com/VDZBlDyuhQ</a> — Brooke Harrington (@EBHarrington) <a href="https://twitter.com/EBHarrington/status/1553533320469905409?ref_src=twsrc%5Etfw">July 31, 2022</a></blockquote> “As a tax researcher, I was skeptical of rumors Trump buried his ex-wife in that sad little plot of dirt on his Bedminster, NJ golf course just for tax breaks,” she tweeted. “So I checked the NJ tax code & folks...it's a trifecta of tax avoidance. Property, income & sales tax, all eliminated.” In 2012, <a href="https://www.npr.org/2012/02/03/146342330/fairway-to-heaven-trump-eyes-a-golf-course-burial" target="_blank" rel="noopener">US radio station NPR reported</a> that Trump planned to build a mausoleum on the property, with the proposal later expanding to potentially containing 1000 possible graves. The plan, which attracted local objections, was later dropped and replaced with a design for a 10-plot private family cemetery” in the same spot before changing again into a proposal for a commercial 284-plot cemetery. Images of Ivana’s final resting place have begun circling online, with many calling out her family for its plain appearance in comparison to memorials to everything from Richard Nixon’s dog to Internet Explorer. <blockquote class="twitter-tweet"> Internet Explorer got a nicer burial than Ivana Trump. <a href="https://t.co/tm5T1hX1bH">pic.twitter.com/tm5T1hX1bH</a> — Thomas (@tarnished_usa) <a href="https://twitter.com/tarnished_usa/status/1553121815517601794?ref_src=twsrc%5Etfw">July 29, 2022</a></blockquote> <blockquote class="twitter-tweet"> Top: Richard Nixon’s dog ‘Checkers’ grave. Donald Trump’s first wife Ivana’s on his golf course. <a href="https://t.co/Rh9q96B8H0">pic.twitter.com/Rh9q96B8H0</a> — Hoodlum 🇺🇸 (@NotHoodlum) <a href="https://twitter.com/NotHoodlum/status/1553490177120681985?ref_src=twsrc%5Etfw">July 30, 2022</a></blockquote> “Not sure which is more shocking - - that Trump had Ivana buried on his golf course for a tax write-off or that her three kids thought this was okay,” investigative journalist Victoria Brownworth <a href="https://twitter.com/VABVOX/status/1554049715184062465" target="_blank" rel="noopener">tweeted</a>. “You don’t have to be an Ivana fan to find this truly grotesque.” “You should be ashamed of yourself. This is a public display of your complete disgrace towards your own mother,” another person <a href="https://twitter.com/keraz37/status/1553538090609827842">tweeted</a>, along with a photo of Ivana’s plot surrounded by patchy grass and a golf court in the background. Image: Twitter

Money & Banking

How to leave a financial legacy in a tax-effective manner

The taxman needn’t be the biggest beneficiary of your financial legacy – so long as your plans are properly enacted while you still walk the earth. While Australia doesn’t have an inheritance tax per se, there are a range of other tax implications and inheritance rules to consider – which may determine how, and even if, you leave a financial legacy for your loved ones. Where there’s a will In 2015, it was estimated that just over half of Australians (59 per cent) have a will. I’d wager a good chunk of those are outdated too – not reflecting separations, remarriage or additions to the family. Most people without a will aren’t choosing to avoid one, but apathy about the need for one has set in. It is difficult to leave a financial legacy – other than confusion and conflict – if you don’t have a current will in place upon your death. Not only does it outline your wishes as to who gets what, it forces you to consider how each asset will be passed down and minimise the taxes and other costs your beneficiaries will inherit. Remember too that your beneficiary may be subject to Capital Gains Tax (CGT) on assets they sell. For example, if you leave someone a rental property, they will likely have to pay CGT when they sell it for the time you owned it – even if they made it their primary residence. That could come as a nasty shock to them. Nothing and no one is equal Not all assets are treated equally; neither are all beneficiaries. For instance, certain entities are governed separately from your will. Superannuation is perhaps the main one, but so too are trusts and companies. Hence you should nominate beneficiaries of these entities to ensure they pass on to your intended recipients. Otherwise, they may be subject to a forced sale – wiping out your legacy. Keep them updated too – otherwise your ex could get an unintended windfall. For jointly owned properties, whether you are tenants in common or joint tenants will determine whether they have automatic right of survivorship. A superannuation death benefit may or may not be taxable, depending on various factors at the time of your death. And if you leave an asset to charity that is subject to CGT, it is your estate – not the charity – which bears the tax burden. So, you may want to leave extra cash in your estate to cover this. Keeping assets in the family A financial legacy usually involves family and passing assets down through generations. How these assets are structured often dictates the ease and cost of doing so. As superannuation is treated outside of a will, it can be great for distributing money within a blended family to ensure everyone is provided for. Self-managed super funds (SMSFs) can include multiple generations but may add complexity when someone retires and begins drawing down super before others do. Or if the asset is illiquid. Conversely, family trusts can offer more flexibility for family-owned assets than super but may not provide the same tax benefits. Also consider how any children or grandchildren under 18 are provided for – and who oversees their inheritance until they turn 18. Testamentary Discretionary Trusts (TDTs) can be useful, taxing assets at the adult rate instead of the higher child tax rate. Good business Ownership structures and new management can affect the profitability and even viability of a business as a going concern, as well as its goodwill among customers, staff, and suppliers. Family businesses should have a plan for who will assume operational control, and whether each director will inherit an equal share. For business partnerships, consider buy/sell agreements to manage insurance policies and ownerships to surviving business partners and your spouse or children. Meanwhile, examine financial and tax implications too. Outstanding director loans to you can affect the tax status of both the business and your personal estate. And commercial transactions may attract transfer duties or stamp duty. Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au Image: Shutterstock

Money & Banking

Progressive in theory, regressive in practice: that’s how we tax income from savings

We’re told Australia has a progressive tax system – the more you earn, the higher the rate. And that’s certainly the case for earnings from wages. An Australian on A$35,000 sacrifices 21 cents out of each extra dollar they earn whereas an Australian on $90,000 sacrifices 39 cents. That’s how it’s meant to be for income from savings, but in practice it isn’t. Fresh calculations released this morning by the <a href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/uploads/taxstudies_crawford_anu_edu_au/2020-07/20271_anu_-_ttpi_policy_report-ff2.pdf">Tax and Transfer Policy Institute</a> at the Australian National University show that low income Australians in the bottom tax bracket pay a higher marginal rate of tax on income from savings than high earners in the top tax bracket. It is because of exemptions and special rates, and the alacrity with which high earners take advantage of them. <h2>Super gives the most to the highest earners</h2> The taxation of superannuation drives the results. Super contributions are generally taxed at a flat rate of 15%. For low earners on an income tax rate of zero, 15% would constitute a considerable extra impost did the government not refund the difference with a <a href="https://drive.google.com/file/d/1W9FN4deDYY9q0ooFDPNqq1CvYAUz90Ao/view">tax offset</a> that cuts the effective rate to zero. High earners on the 47% marginal rate do much better. The tax rate of 15% offers substantial tax relief. For them, it is an effective rate of minus 32%. Other tax concessions are directed at older Australians, who are often on higher incomes than younger Australians. <h2>Highest bracket, lowest rate</h2> Our calculation of the marginal effective annual tax rates actually paid on income from savings is published in a report entitled <a href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/uploads/taxstudies_crawford_anu_edu_au/2020-07/20271_anu_-_ttpi_policy_report-ff2.pdf">the taxation of savings in Australia: theory, current practice and future policy directions</a>. It shows that the marginal tax rate high earners pay on additional savings held over a twenty year period is 5.3% of income, on average, whereas for low earners in the bottom (zero) tax bracket it’s 12.2%. Low earners in the second lowest tax bracket are paying 13.8%. <hr /> Marginal effective tax rates actually paid on income from savings, by bracket <a href="https://images.theconversation.com/files/348198/original/file-20200718-15-e3c10t.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/348198/original/file-20200718-15-e3c10t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="" /></a> Authors’ calculations using data from the Australian Survey of Income and Housing, 2019. <a href="https://taxpolicy.crawford.anu.edu.au/" class="source">TTPI Policy Report 01-2020</a> <hr /> <h2>The way forward: a dual income tax system</h2> Our report proposes taxing all types of saving at the same flat low rate. This dual income tax system (a progressive rate for wages and salaries, a flat rate for income from savings) has been used in Norway, Finland, Sweden and Denmark since the early 1990s. Elements of it are used in Austria, Belgium, Italy, Greece and the Netherlands. If the rate were 10% • all interest payments would be taxed at 10% • all dividends, both domestic and foreign, would be taxed at a rate of 10% • all capital gains (including owner-occupied housing) would be taxed at 10% • superannuation contributions would be made from after-tax income and then earnings in the accounts taxed at 10% • rent and capital gains on investment properties would be taxed at 10% • the imputed rent from owner-occupied housing (the benefit home owners get from not having to pay rent that is taxed) would be calcuated and taxed at a rate of 10%. An alternative would be to raise the same amount through a broad-based land tax. Our calculations suggest that if the tax were applied broadly at a rate of 6.2%, it would raise as much as is raised now from taxes on income from savings. If income from owner-occupied housing were excluded, the rate would need to be 10.2%. But there is no particular reason for the rate to be set to generate as much from savings income as it does now. It could be set to raise more, or to raise less. The design and implementation of a dual income tax should be considered alongside broader changes to the tax and transfer system. In particular, it should be combined with removing opportunities to re-classify income for tax minimisation purposes. We outline some of the considerations <a href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/uploads/taxstudies_crawford_anu_edu_au/2020-07/20271_anu_-_ttpi_policy_report-ff2.pdf">in our report</a>. In the meantime, as steps towards a flatter fairer system of taxing income from savings, the government could consider better targeting superannuation subsidies, replacing real estate stamp duty with land tax and including the family home in the means tests for pensions and other age-related benefits. Our current approach to taxing income from savings is a mess at best and a serious driver of intergenerational inequality at worst. Some savings tax arrangements are progressive, taxing higher incomes more heavily, and some are regressive. We want to encourage and reward savings. But we also need to remove the crazy incentives that impel ordinary Australians to take part in distorting and costly tax planning schemes. Our report outlines a way forward, and steps to get there.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/142823/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/robert-breunig-167291">Robert Breunig</a>, Professor of Economics and Director, Tax and Transfer Policy Institute, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a>; <a href="https://theconversation.com/profiles/kristen-sobeck-714969">Kristen Sobeck</a>, Senior Research Officer, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a>, and <a href="https://theconversation.com/profiles/peter-varela-1136772">Peter Varela</a>, Research Fellow, Tax and Transfer Policy Institute, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/progressive-in-theory-regressive-in-practice-thats-how-we-tax-income-from-savings-142823">original article</a>. Image: Shutterstock

Retirement Income

Tax avoidance, evasion, and the Pandora Papers

What’s the difference between tax avoidance and tax evasion? The difference used to matter. Evasion was illegal. It meant not paying tax that was due. Avoidance meant arranging your affairs so tax wasn’t due. Australian media mogul Kerry Packer used the distinction as a complete defence when he told a <a rel="noopener" href="https://youtu.be/LnwYoOeWZGA?t=312" target="_blank">parliamentary committee</a> in 1991 he was "not evading tax in any way, shape or form. Of course, I am minimising my tax. Anybody in this country who does not minimise his tax wants his head read". The Pandora Papers — the biggest-ever leak of records showing how the rich and powerful use the financial system to maximise their wealth — shows the distinction has lost its meaning. The dump of almost <a rel="noopener" href="https://www.icij.org/investigations/pandora-papers/" target="_blank">12 million documents</a> lays bare the ways in which 35 current or former leaders and 300 high-level public officials in more than 90 countries have used offshore companies and accounts to protect their wealth. Only in some of the cases could their activities be categorically declared illegal. Tax havens are legal Here’s how tax havens are used. Trusts and companies are set up in places with low tax rates and secrecy laws such as the Bahamas, Cayman Islands, Hong Kong, Singapore, Switzerland, the US state of Delaware and the Republic or Ireland. If, for example, a wealthy celebrity or a politician wants to buy a new yacht or a luxury villa but doesn’t want to pay tax or stamp duty or expose their wealth to scrutiny they can get their lawyer or accountant to do it through such a trust. For somewhere between <a rel="noopener" href="https://www.icij.org/investigations/pandora-papers/global-investigation-tax-havens-offshore/" target="_blank">US$2,000 and US$20,000</a> to set up the trust, the name of the real owner or beneficiary can be hidden. It isn’t illegal for the celebrity or a politician to move their money (so long as it is theirs to begin with). Assets within the trust are subject to local tax laws (sometimes zero tax) and local secrecy laws (sometimes complete secrecy). Legal, but used by criminals These legal means of using complex networks of secret entities to move around money are the same as those used by criminals. Alongside the likes of India’s cricket superstar Sachin Tendulkar, Colombian pop singer Shakira and Elton John in the Panama Papers are Italian crime boss <a rel="noopener" href="https://www.icij.org/investigations/pandora-papers/global-investigation-tax-havens-offshore/" target="_blank">Raffaele Amato</a>, serving a 20-year jail sentence for weapons and drugs trafficking, and the deceased British art dealer <a rel="noopener" href="https://www.theguardian.com/news/2021/oct/05/offshore-trusts-used-pass-on-looted-khmer-treasures-leak-shows-douglas-latchford" target="_blank">Douglas Latchford</a>, suspected of smuggling looted treasures and money laundering. <img src="https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" alt="Colombian singer Shakira is one of the celebrities named in the Pandora Papers as using offshore companies. Others are Elton John, Ringo Starr, Julio Iglesias and Claudia Schiffer." /> Colombian singer Shakira is one of the celebrities named in the Pandora Papers as using offshore companies. Others are Elton John, Ringo Starr, Julio Iglesias and Claudia Schiffer. Gregory Payan/AP It’s far from clear these arrangements should be legal The big question raised by the Pandora Papers is why any hiding of private wealth from tax authorities ought to be legal. The International Monetary Fund estimated in 2019 that tax haven deprived governments globally of <a rel="noopener" href="https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-global-tax-havens-shaxon.htm" target="_blank">US$500 billion to US$600 billion</a> per year. To put that into perspective, the estimated cost of vaccinating the world against COVID-19 is <a rel="noopener" href="https://www.nytimes.com/2021/06/11/briefing/biden-g7-vaccine-donations.html" target="_blank">US$50-70 billion</a>. <a href="https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img src="https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" alt="" /></a> OECD chief Mathias Cormann has brokered a deal for a global minimum corporate tax rate. OECD (CC BY-NC 3.0 IGO) Some of what’s been uncovered in the Pandora Papers is illegal (“evasion”) but much might not be (“avoidance”, aided by anonimity). The effect is the same. Dollars that ought to have been paid in tax are withheld and used for the benefit of people who aren’t keen to admit to owning them. Over the weekend the Organisation for Economic Co-operation and Development, now led by Australian Mathias Cormann, brokered a deal under which 136 countries agreed to charge multinational corporations a tax rate of at least <a rel="noopener" href="https://www.oecd.org/tax/international-community-strikes-a-ground-breaking-tax-deal-for-the-digital-age.htm" target="_blank">15%</a>, making tax havens harder to find. Ireland, previously used as tax haven, signed up. The nations concerned did this because because, even where legal, the use of tax havens costs billions. We’ll soon have to consider removing a distinction in law that vanished in practice some time ago.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/169353/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a rel="noopener" href="https://theconversation.com/profiles/alex-simpson-225991" target="_blank">Alex Simpson</a>, Senior Lecturer in Criminology, <a rel="noopener" href="https://theconversation.com/institutions/macquarie-university-1174" target="_blank">Macquarie University</a> This article is republished from <a rel="noopener" href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a rel="noopener" href="https://theconversation.com/the-pandora-papers-show-the-line-between-tax-avoidance-and-tax-evasion-has-become-so-blurred-we-need-to-act-against-both-169353" target="_blank">original article</a>. Image: Aekawit Rammaket/Shutterstock

Money & Banking

Picasso’s daughter exchanges famous artworks for a tax bill settlement

The French Government has negotiated a unique deal with Pablo Picasso’s daughter, Maya Ruiz-Picasso, to settle an inheritance tax bill. France is set to receive six paintings, two sculptures and a sketchbook by the world-famous artist, as French finance minister Bruno Le Maire announced during a press conference at the PIcasso Museum. “It is an honour for our country to welcome these new artworks by Picasso. They will enrich and deepen our cultural heritage,” Le Maire wrote on Twitter. Le Maire presented one of the artworks at the press conference: the 1938 painting called Child with a Lollipop Sitting Under a Chair. According to Picasso’s grandson Olivier Widmaier-Picasso, the painting depicts his mother Maya as a child. French citizens have been permitted to settle debts similar to Maya’s with a payment of profitable art, books, and collectibles of national importance since 1968. The collective total of the nine objects given by Picasso's daughter was not publicly disclosed. According to France’s culture minister Roselyne Bachelot, the artworks will enter the national collections at Paris’s Musée Picasso in 2022, and will be exhibited as a whole to the public in the spring of 2022. “It is with deep emotion that I come to celebrate the entry into the national collections of the works,” said Bachelot, who called the donation an “exceptional event.” Image credit: French Ministry of Culture

Art

50% of Australians are prepared to pay more tax to improve aged care workers’ pay, survey shows

The final report from the aged care royal commission this week was damning. Speaking of a system in crisis, it calls for an urgent overhaul. The Morrison government has been facing difficult questions regarding which of the 148 recommendations it will adopt. It also needs to grapple with how to pay for the much-needed changes. On this question, the royal commissioners disagree. Commissioner Lynelle Briggs calls for a levy of 1% of taxable personal income, while commissioner Tony Pagone recommends the Productivity Commission investigate an aged care levy. A 1% levy could cost the median person who already pays the medicare levy about $610 a year, while boosting funds for the aged care sector by almost $8 billion a year. So far, the government has played down the idea of new taxes. There is a view this would be hard sell for a Coalition elected, at least in part, to lower taxation. But as debate continues about how to make the changes we need to aged care (and not just talk about it), our research suggests many Australians support a levy to improve the quality and sustainability of our aged care system. Our research In September 2020, we surveyed over 1,000 Australians aged 18 to 87 years, representative by age, gender and state. We wanted to find out how the pandemic influenced attitudes to health, well-being and caring for others. Our findings indicated overwhelming public support for aged care reform, to ensure all older Australians are treated with dignity. The vast majority of our respondents (86%) either “strongly agreed” or “agreed” Australia needed more skilled and trained aged care workers. On top of this, 80% thought aged care workers should be paid more for the work that they did. More than 80% also either “strongly agreed” or “agreed” that nurses working in aged care should be paid at an equivalent rate to nurses working in the health system. Currently, nurses working in aged care are paid, on average, about 10-15% less. The crunch point Importantly, 50% of our respondents showed a willingness to pay additional tax to fund better pay and conditions for aged care workers. Of those willing to pay more tax, 70% were willing to pay 1% or more per year. This finding supports previous larger-scale research we undertook for the royal commission, before the pandemic. Here we found similar levels of public support for increased income tax contributions to support system-wide improvements. This suggests politicians seem to underestimate the public appetite for improvements to the system, and people’s willingness to contribute to achieve this. Changing ideas about economic ‘success’ Our survey findings also highlighted a growing recognition among Australians of the importance of a broader range of social and economic goals. For some time, economists, academics, organisations and peak bodies have been calling for a move away from traditional economic indicators (such as economic growth and expanding gross domestic product) at any cost, towards a broader definition of success. This would see governments focus on policies that promote a more equal distribution of wealth and well-being, where the fundamentals of community cohesion are highly valued and our natural resources are protected. We asked our survey respondents to rank the relative importance of seven key areas of public policy in framing Australia’s pathway to recovery from the COVID-19 pandemic, including: <ul> <li>dignity (people have enough to live in comfort, safety and happiness)</li> <li>nature and climate (a restored natural world which supports life into the future)</li> <li>social connection (a sense of community belonging and institutions that serve the common good)</li> <li>fairness (equal opportunity for all Australians and the gap between the richest and the poorest greatly reduced)</li> <li>participation (having as much control over your daily life as you would want)</li> <li>economic growth (an increase in the amount of goods and services produced in Australia), and</li> <li>economic prosperity (full employment and low inflation levels). The criteria ranked most important by the largest proportion of our survey respondents were dignity (20.1%) and fairness (19.3%).</li> </ul> Traditional economic indicators were not the highest priorities for the Australians we surveyed. Instead, economic growth and prosperity were only ranked as a top priority by 15.3% and 15.2% of our respondents respectively. This suggests the general public recognises the importance of moving beyond the traditional markers of a successful society. What Australians want Our research shows significant aged care reform is entirely consistent with the current priorities of the Australian public. The burning question now is whether the Morrison government will step up to the challenge. Written by Rachel Milte and Julie Ratcliffe. This article first appeared on <a href="https://theconversation.com/50-of-australians-are-prepared-to-pay-more-tax-to-improve-aged-care-workers-pay-survey-shows-156299">The Conversation</a>.

Retirement Income

The one percent plan: Bold strategy to reverse economic downturn

Egypt will deduct 1 per cent from resident’s salaries for 12 months, starting from July 1. The new bold measure aims to offset the major economic repercussions seen due to COVID-19. Both public and private sectors will be hit with the tax but it will only apply to those who have a net monthly salaries exceeding 2000 Egyptian pounds ($NZ206.05). A tax of 0.5 per cent will also be deducted from state pensions. The brand new measure follows as Egypt tries to deal with the economic impact of the pandemic, which has brought tourism to a grinding halt, triggered major capital flight and threatened remittances from Egyptians working overseas. Funds from the new salary tax will go towards supporting organisations and workers specifically impacted by the virus. The cabinet also said in a statement, that direct support will be offered to some citizens. Those affected economically by the outbreak may be exempted from the tax. Egypt now has over 13,400 coronavirus cases, including more than 650 deaths. On Tuesday, the country recorded its biggest rise in daily cases to date.

Money & Banking

Are you committing a crime by importing cigarettes into Australia?

The tax on tobacco in Australia is astronomical, pushing the average price of a cigarette packet beyond forty dollars in recent months. The tax has been justified on public health grounds, and has been partially responsible for significantly reducing the consumption of tobacco products in Australia. The tax has been accompanied by a range of restrictions on the importation of tobacco products, with the number of cigarettes that a person can bring into the country without a permit being reduced from 200 just a few years ago, to one unopened packet of up to 25 cigarettes and one open packet of up to 25 cigarettes. Restrictions have also been placed over the years on the use of tobacco, with prohibitions on a range of venues and public places. The exorbitant price of tobacco has contributed to a <a href="https://www.sydneycriminallawyers.com.au/blog/cheap-cigarettes-available-over-the-internet/">thriving black market</a>, with many arranging for the importation of products by mail and others packing it into their luggage. And while many feel there’s little wrong with bringing a few extra packs into the country, the law says something completely different. The law on importing tobacco products Since 1 July 2019, tobacco products including cigarettes, loose leaf tobacco, shisha/molasses tobacco and ‘heat not burn’ tobacco <a href="https://www.abf.gov.au/importing-exporting-and-manufacturing/prohibited-goods/categories/tobacco">have been classified as prohibited imports</a>, which means it is a criminal offence to import them in the mail. A permit is required to import them otherwise. A permit is not required to import cigars or up to 1.5 kilograms of chewing tobacco and snuffs intended for oral use, provided duties and taxes are paid. Travellers into Australia do not require a permit to import tobacco products in personal effects, provided they are 18 years or older, declare the product/s upon arrival and pay duties and taxes. Permission is, however, required from the Australian Competition and Consumer Commissioner to bring in more than 1.5 kilograms of chewing tobacco or snuff. Travellers who contravene these rules are subject to having their visas cancelled, being issued with infringement notices (fines) or being criminally prosecuted. Criminal offences <a href="https://www.sydneycriminallawyers.com.au/criminal/legislation/customs-act/smuggling-tobacco-products/">Section 233BABAD of the Customs Act 1901</a> (Cth) sets out four separate criminal offences which relate to tobacco products. Subsection (1) prescribes a maximum penalty of 10 years in prison for ‘importing tobacco goods’ with ‘the intention of defrauding the revenue’. The offence applies, for example, where a person brings tobacco products into the country in breach of the rules or arranges for their importation in the mail. Subsection (2) sets the same maximum penalty for possessing or conveying tobacco products in the knowledge that they were imported with the intention to defraud the revenue. The offence applies to those who receive or transport tobacco products for which they know duties and taxes haven’t been paid. In addition to prison, those who are guilty under subsection (1) or (2) are subject to fines equivalent to up to five times the amount of the applicable duty or, if the court is unable to determine that duty, a maximum of 1,000 penalty units (currently $210,000). Subsection (2A) prescribes a maximum penalty of five years behind bars for importing tobacco products in circumstances where the person is reckless as to whether there would be a defrauding of the revenue. A person is ‘reckless’ for the purposes of the subsection if they were aware it was likely that there would be a defrauding but went ahead with their actions regardless. And subsection (2B) sets the same 5 year maximum penalty for possessing or conveying tobacco products where the person is reckless as to whether they were imported with the intention to defraud the revenue. A person is ‘reckless’ if they were aware it was likely that the products were imported with the intention to defraud but went ahead with their actions regardless. In addition to prison, those who are guilty under subsection (2A) or (2B) are subject to fines equivalent to up to three times the amount of the applicable duty or, if the court is unable to determine that duty, a maximum of 500 penalty units (currently $105,000). For the purposes of the Act, ‘tobacco products’ are broadly defined as including: <ul> <li>Unmanufactured tobacco and tobacco refuse,</li> <li>Cigars, cheroots, cigarillos and cigarettes of tobacco and tobacco substitutes, and</li> <li>Other manufactured tobacco and substitutes, extracts and essences, including water pipe tobacco.</li> </ul> See <a href="http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca1901124/s4.html">section 4 of the Customs Act</a> which refers to <a href="http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/cta1995178/sch3.html">Schedule 3 of the Customs Traffic Act 1995</a>. Going to Court for an Offence Involving Tobacco Products? If you have been charged with an offence involving tobacco, call <a href="https://www.sydneycriminallawyers.com.au/">Sydney Criminal Lawyers</a> anytime on (02) 9261 8881 to arrange a free first conference with an experienced defence lawyer who will advise you of your options and the best way forward, and fight to ensure you receive the optimal outcome. Written by Ugur Nedim. Republished with permission of <a href="https://www.sydneycriminallawyers.com.au/blog/is-it-a-crime-to-import-cigarettes-into-australia/">Sydney Criminal Lawyers.</a>

Travel Tips

Iconic tourist destination slugging visitors with a “tourist tax”

The popular tourist destination of Venice has announced that they are going to start charging day-trippers a new tax from July 1st, 2020. The day-trip tax for tourists was announced about a year ago, but the implementation of the tax has been delayed as authorities argued about how it would be enforced. However, city officials have announced that while they’ll confirm the exact fee closer to the date, they will be charging between 3 and 10 euros ($AUD 4.90 to $16.30) a day for day-trip visitors. Overnight tourists or visitors will be exempt as they already pay tax as a part of their accommodation fees. There are also exemptions to be expected for those visiting Venice to work, study or visit family. As Venice is a canal city that’s been popular amongst tourists, the floating city is struggling under the weight of overtourism. With more than 20 million people visiting the destination each year, this is a far cry of their estimated permanent population of 260,000. Locals have even begun to protest the amount of tourists who come and visit Venice. A Venice local named Tommaso, who attended a <a href="https://www.news.com.au/travel/travel-updates/incidents/ships-out-of-the-lagoon-locals-march-against-cruise-ships-in-venice/news-story/5d646acacc7f5110c95da8fa069e3f2d">protest at St Mark’s Square in June</a>, said Venice’s lagoon has “never been so full”, leaving the city and locals at the “mercy of mass tourism”.

Travel Trouble

Why you need to visit France before 2020

France are planning on introducing a new charge on plane tickets from next year. The country plans on using the revenue to fund environmentally friendly alternatives, according to the country’s transport minister Elisabeth Borne. The “ecotax” will cost between 1.50 euros ($NZD 2.49) and 18 euros ($NZD 29.91) and will apply to most flights departing from France. However, industry group IATA is favouring a system that allows airlines to offset their emissions by paying for carbon reduction efforts elsewhere. They are calling the ticket charge system “misguided”. “National taxes will do nothing to assist the aviation industry in its sustainability efforts,” IATA spokesman Anthony Concil said, according to <a href="https://www.news.com.au/travel/travel-advice/flights/france-to-slap-new-ecotax-on-plane-tickets-from-2020/news-story/660d5b3771308c35a386b9571502c2e4">news.com.au</a>. “This alone won’t do much, but it’s at least a recognition by the French government that more is required,” said Andrew Murphy, an air travel expert at Brussels-based group Transport and Environment. Germany, Italy and some Nordic nations have ticket taxes. Germany’s Environment Ministry said on Tuesday that it supported discussions on additional CO2-based pricing systems for air travel to reduce the industry’s contribution to man-made greenhouse gas emissions. “What’s more, the conditions for competition between air, road and rail travel need to be made fairer,” the ministry said in a statement. “This is something we in Europe need to achieve together.”

Travel Trouble

“Rip off”: Furious tourists charged $141 for 8 soft drinks

A group of tourists were left agitated after being charged €82 ( $NZD141) for seven soft drinks and a milkshake after visiting a restaurant in Rhodes, Greece. This seems to be a common theme as of late with tourists getting stung with higher-than-expected food bills while travelling on holiday. Vikki Scott shared her experience at The Gate in Old Rhodes Town on Facebook. “Went to The Gate restaurant in Old Rhodes Town for a drink,” she wrote on Facebook. “The bill for eight soft drinks was €82 — €14 ($NZD 24) for a milkshake! “I confronted him and all he could say was ‘thank you lady’ people like him should not be allowed to rip off tourists,” the post said. “On our way back he posed for the photo until he realised who I was then he followed me down the street telling me I couldn’t take his photo. “Please share this especially in Rhodes sites to stop others getting ripped off!” <iframe src="https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2Fvikki.scott.961%2Fposts%2F2309378365951441&width=500" width="500" height="764" style="border: none; overflow: hidden;" scrolling="no" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe> Some people were quick to comment on the post saying that it was unfair for restaurants to charge that much. “All I can say is have your wits about you. Many places rip off the tourists,” one commented. Another agreed saying: “Easy money for them. I would have asked for a proper till receipt. No receipt no pay.” However, some felt it was up to the patrons to be smart. “Check the menu prices — otherwise only yourself to blame!” one commented.

Travel Trouble

5 tips to improve your financial wellbeing

Have you been thinking about money lately? Wondering where to find more? Thinking you could do a better job of managing the dollars you have? If so, you are in good company. Between figuring out how to pay for bills that added up over December holidays, wishing for warmth or a vacation and looking at the beginning of tax season, this is a time of year when people are often prompted to take a closer look at their finances. Yet the picture we see when we look closer isn’t always good. Our research shows that <a href="https://doi.org/10.1007/s10834-016-9516-1">the more money family caregivers need to spend on the care needs of others, the worse their own personal financial, social and health outcomes are</a>. It also points to the need to consider our own care needs as well as our families’ when we plan our financial futures. The financial crisis of 2008-09 sparked increased interest in financial literacy worldwide. In Canada, <a href="http://publications.gc.ca/collections/collection_2011/fin/F2-198-2011-eng.pdf">the Task Force on Financial Literacy</a> defined financial literacy as having the knowledge, skills and confidence to make responsible financial decisions. Following on the work of the task force, the <a href="https://www.canada.ca/en/financial-consumer-agency/programs/financial-literacy/financial-literacy-strategy.html">Financial Consumer Agency of Canada consulted widely and developed a national strategy for financial literacy</a>. Now researchers are moving beyond the idea of financial literacy, which tends to focus on what we know about finances, to thinking about financial well-being or financial health — the outcome we want to achieve. What is financial well-being? An international authority on consumer finances, Elaine Kempson, defines financial well-being as <a href="https://www.researchgate.net/publication/326847922_Understanding_Financial_Well-Being_and_Capability_-_A_Revised_Model_and_Comprehensive_Analysis">the capacity to meet one’s current obligations comfortably and the resilience to maintain this capacity in the future</a>. That’s challenging for many reasons. We have to make decisions for today that are going to help us in a future with a lot of unknowns. It isn’t just financial knowledge that matters, but also what we are able to do with that knowledge in our economic and social environments. Further, as research in behavioural economics is showing, <a href="https://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions/discussion">our brains can get in the way</a>. We think we are making <a href="https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-our-most-irrational-financial-habit-cheaping-out-on-retirement-saving/">perfectly rational, logical decisions when we aren’t</a>. Technological innovation in <a href="https://www.huffingtonpost.com/entry/what-is-fintech_us_58a20d80e4b0cd37efcfebaa">financial services (“fintech”)</a> can be difficult to keep pace with and understand. And, although there are lots of resources, it can be difficult to figure out which are appropriate for our own situation. So if you’ve been finding it difficult to get control of your money and make the changes you want to make to improve your financial well-being, there are some good reasons it might be challenging. While some people respond to a challenge by digging right in, others prefer to look the other way and hope it will all work out in the end. However, when it comes to money, looking the other way can result in big problems — or at the very least, missed opportunities. Tips for increasing financial well-being Whether you feel overwhelmed by your finances and don’t know where to start, or you think things are pretty good but you’d like to make them better, it’s never too late to make a change. Here are some tips and techniques to start improving financial well-being. 1. Spend less than you earn Think about three big categories of money: spending for today, saving for the future and giving to the causes and organizations that matter to you and your family. When we spend less than we earn, we create the space to save and to give to others. Note: spending includes debt repayment! 2. Do the math No one tool is best, but most of us could use a little help in making a budget, revising it as needed and tracking spending. Use what works for you, whether that’s a spreadsheet, an app, financial software or a pencil and paper. The best tools are the ones you use. 3. If possible, don’t do it alone If you have a spouse or partner, work to be sure you are on the same page with financial decisions. Financial stress can be a significant source of tension in relationships. If you’re single, could you have a low-budget finance date or breakfast with a friend to compare notes? And if you have kids, bring them into money conversations in age-appropriate ways. Research is showing parents can be important, positive financial role models for their children. 4. Save off the top Arrange to have a set amount come out of your chequing account and go into a savings account each payday. Revise the amount as your pay changes over time. Aim to have three to six months worth of expenses in savings to cover emergencies. 5. File that tax return Even if you don’t owe taxes, file that return! Filing is the only way to get refundable tax credits like the GST refund. Federal and provincial governments use the income on tax returns to establish eligibility for benefits and supports. Even if you don’t get a sunshine getaway this year, if you’re responsible and proactive right now, a piece of that serenity will be within reach through your ongoing wellness — and the occasional well-planned splurge.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/111489/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> Written by Karen Duncan, Associate Professor, Department of Community Health Sciences, University of Manitoba. Republished with permission of <a href="https://theconversation.com/no-vacation-find-serenity-with-these-five-financial-wellness-tips-111489">The Conversation</a>.

Retirement Income

Watch out! These 7 phone call scams could steal your money

1. “Can you hear me?” Pause before speaking if a caller starts by asking, “Can you hear me?” Scammers are looking for a specific answer, says Eva Velasquez, CEO and president of the US-based Identity Theft Resource Center. “By getting you to answer ‘yes’ to that one question at the very beginning of the call – as opposed to somewhere in the middle of the conversation, where dubbing would be more obvious – scammers can record your affirmative answer,” she says. They can use that recording to claim you agreed to pay for some scam program. Even if it looks like the call is from someone you know, rephrase your answer to “I hear you just fine” to be safe, suggests Velasquez. 2. IRD and ATO impersonators Don’t freak out if someone claiming to be from the Australian Tax Office (or, in New Zealand, the Inland Revenue Department) calls to collect money. Scammers use fear tactics and threaten to send the police if you don’t pay up immediately, but don’t fall for it. Government bodies such as the IRD and ATO will commonly get in touch with you in the mail, on official letterhead. Even if the callers don't ask for money, they could prey on your information by asking you to verify your identity. They might even quote information you’d think only the ATO or IRD could know, like what you paid in taxes last year, but that doesn’t mean you can trust them with your private details. Hang up and call a phone number you can verify online. 3. Bank calls The ATO or the IRD won't call, but your bank might, which makes it harder to figure out if it’s the real deal. Plus, it makes sense that your bank would need to confirm your identity to protect your account. If your bank calls and asks you to confirm if transactions are legitimate, feel free to give a yes or no. But don’t give up any more information than that, says Adam Levin, founder of global identity protection and data risk services firm CyberScout and author of Swiped: How to Protect Yourself in a World Full of Scammers, Phishers, and Identity Thieves. Some scammers rattle off your credit card number and expiration date, then ask you to say your security code as confirmation, he says. Others will claim they froze your credit card because you might be a fraud victim, then ask for your pin number or other secure details. Only give out that kind of information out if you made the call – and don’t just use the number that contacted you. “Flip your credit card or debit card over, look at the number, call customer service and ask if you guys just called me,” says Levin. “They have on the computer if they did or didn’t.” 4. Tech support If someone claiming to be from Microsoft, Apple, or another tech company calls to ask if you’ve had computer problems, just say no and hang up. “No one is ‘watching’ your computer for signs of a virus,” says Velasquez. Those scammers won’t fix the problem – they’ll make it worse by installing malware, says cybersecurity expert John Sileo. What’s worse, you might not connect those later problems to that scam call. The fake tech support put it in your head that your computer is slow, so you might think it’s normal when you notice it's lagging later on, he says. 5. Grandparent scam Scammers sometimes target elderly people, pretending to be a grandchild. On a crackly line, they’ll say they’re in trouble – maybe they lost their wallet in a foreign country – and need you to send money, says Levin. Unless you can confirm it's actually a relative, don't give any money. “If you are truly concerned, gather the appropriate information from the scammers and hang up,” says Velasquez. “Confirm your grandchild’s safety before doing anything else.” 6. Lucky winner Congrats, you just won a million dollars! If it sounds too good to be true, it probably is. That big cash prize or amazing holiday sounds too tempting to ignore, but real contests only enter you if you ask. “In a legitimate lottery or sweepstakes, you have to enter the contest somehow,” says Velasquez. “If you ever ‘win’ a prize that you didn’t enter – especially one with a prize worth millions of dollars – you’re probably being scammed.” Even if you did enter a lottery, don't trust a supposed tax collector who contacts you. You would need to pay taxes on your winnings eventually, but never before you receive the money, says Velasquez. 7. Donation collections When charities and other non-profits request donations over the phone, it's OK to show a little healthy scepticism. “Some will be legitimate. Many will not,” says Levin. “Risk being rude and saying you will call back or say ‘Then send me something. I want to read about it.’” If it is a cause you care about, do a little digging online to figure out if it’s a real charity. Even legitimate charities might not live up to their good-deed claims though. Verify from a third party like <a href="http://www.changepath.com.au/">changepath.com.au</a> in Australia, which rates organisations on factors like how transparent they are with administrative costs and the general availability of their financial reports, or <a href="https://www.register.charities.govt.nz/CharitiesRegister/Search">register.charities.govt.nz/CharitiesRegister/Search</a> in New Zealand. Written by Marissa Laliberte and Greg Barton. This article first appeared in <a href="http://www.readersdigest.co.nz/money/watch-out_these-7-phone-call-scams-could-steal-your-money">Reader’s Digest</a><a href="http://www.readersdigest.co.nz/money/watch-out_these-7-phone-call-scams-could-steal-your-money">.</a> For more of what you love from the world’s best-loved magazine, <a href="http://readersdigest.innovations.co.nz/c/readersdigestemailsubscribe?utm_source=over60&utm_medium=articles&utm_campaign=RDSUB&keycode=WRN87V">here’s our best subscription offer.</a> <img style="width: 100px !important; height: 100px !important;" src="https://oversixtydev.blob.core.windows.net/media/7820640/1.png" alt="" data-udi="umb://media/f30947086c8e47b89cb076eb5bb9b3e2" />

Legal

Prince Harry’s $35 million fortune under threat

It has come to light that Prince Harry’s $35 million trust fund, set up for him by his late mother Princess Diana and the Queen Mother, could be targeted for tax reasons thanks to a US legal loophole. Despite Harry and Meghan marrying in May this year, the new Duchess of Sussex is still technically a US citizen. While it’s believed she has officially applied to become a British citizen, apparently – even though she is a royal now – her application process doesn’t receive any special treatment and could take several years before she is granted UK citizenship. Which means, in the meantime, the former actress is legally required to pay US income tax on any earnings or allowances she receives whilst residing in Britain. But now that she is married to Prince Harry, it could mean his own earnings could be affected too. Royal aides speaking to the Sunday Express in the UK, stated, “We’re looking at a level of financial exposure the royal family has never had to face before.” They added, “It’s the royal household’s worst nightmare … Everything has to be declared.” Along with Meghan’s own $7 million fortune she amassed during her acting career, British media has reported that the US taxman could also have his eye on her designer clothes, jewellery, homes and gifts the new Duchess has received as royal proceeds. The Duke of Sussex lives off his $35 million trust fund inheritance, earning an annual salary of around $525,000 a year. But the US government could potentially count that towards Meghan’s income in the UK too. Do you think Harry and Meghan should have to pay US tax on their royal earnings? Share your thoughts in the comments below.

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