Personal Finance

Paying to Pay for Something

Credit card surcharging is in the news. Apparently, consumers are going to benefit by new surcharge limits that will be imposed on retailers. However, what is surcharging? In addition, why does it need limits? Moreover, is surcharging a good or a bad thing for customers?

Featured Articles

Tax Havens are Safe from the OECD for Now

The news has been full of stories about how companies such as Amazon, Apple, Google, Microsoft, Starbucks and others are able to shift their profits to low or no-tax jurisdictions by using novel, legally permitted corporate structures and complex internal transactions (known as transfer pricing schemes). Companies are able to do so because they pay taxes at the place of their residence rather than where the underlying economic activity takes place.

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The Tobin Tax would Work, in Theory

Tax the rich and give money to the poor – that is the basis of fiscal policy put forward by the UK Labour Party’s new shadow chancellor, John McDonnell. As well as forcing large corporations to pay their “fair share,” they resurrected the idea of the Robin Hood – or Tobin – tax. However, what actually is it and how would it work?

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Commercial Bank Reform would help SMEs and ASEAN

Concerns about moderating economic growth and rising income inequality in ASEAN economies have brought small and medium-sized enterprises (SMEs) into the policy limelight. Arguing that SMEs have significant potential for creating jobs, some commentators are suggesting a host of industrial policies such as financial subsidies and local content rules to promote SMEs.

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Discretionary Trusts and the Smell Test

The public knows something is “not right” with the tax treatment of family trusts (discretionary trusts). Accountants and tax lawyers working with discretionary trusts know firsthand that the income tax treatment has trouble passing the “smell test”. That is something even the most aggressive tax minimisers would concede.

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Do You Have the Right Personality for a Loan?

Lending money is a risky business. Since 2010, Bank of England figures reveal that lenders have written off an average of £13.2 billion a year in bad loans. You can never be 100% sure that you will ever get your money back.  One way of mitigating that risk is to know as much as possible about the person to which you are lending. Indeed, some financial managers reportedly are now considering the use of personality tests to assess the suitability of borrowers seeking loans or credit agreements.

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Banking System Access Eludes Women Globally

Around the world, women in developing economies enjoy less access than men do to the banking system.  Bank account opening procedures, especially requirements to produce identity documents, are a major barrier for undocumented women in developing countries. These requirements aim at meeting anti-money laundering and counter terrorist financing (AML/CTF) obligations. But the barriers may be set unnecessarily high for women given their crime risk profile.

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Trading Short-Term Financing Gain for Long-Term Pain

George Osborne is in the process of finding £20 billion of savings with his government spending review. As the government searches to balance the budget and reduce public spending, it is worth re-examining an old favourite when it comes to keeping spending off the balance sheet – private finance initiatives (PFI).

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Can Australia Grow Their Economy via Tax Cuts?

In his recent speech on personal income tax cuts, Treasurer Joe Hockey made clear that the “common cause of reform [of the tax system is] to improve the growth trajectory of the Australian economy”. The key to this for Hockey is to ensure the income tax system is not constraining workforce participation and effort, through things such as bracket creep.

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The Three Rules of the Dodd-Frank Law

Dodd-Frank turned five last month and once again, the debate around some of its rules sparked many discussions by politicians and economists, but less by the public. According to a poll conducted in 2015, only 4 percent were ‘very familiar’ and 30 percent were ‘somewhat familiar’ of the Dodd-Frank law. Those who were aware were asked “Thinking about financial regulation, which comes closer to your view?” The results revealed that 45 percent believed that the government had gone too far and “made it difficult for economy to grow” while 47% believed that not enough was done and there could be another financial crisis.

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The Franc(ness) of SNB's Problems

Earlier today, the Swiss National Bank reported a record CHF50.1 bln loss. It has the chins wagging, but the real implications are minor.  The losses are not realized and are unlikely to be repeated.  In fact, if the SNB's report had covered the month of July, the loss would likely have been smaller.

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Are Globally Systemically Important Banks (G-SIBs) Still at Risk?

Ever since the 2008 financial crisis, the Federal Reserve Board has been trying to regulate big banks that pose huge systemic risk to the economy. The financial crisis highlighted the fact that big banks were taking more risks for which they were not prepared.  Some banks were so big that if allowed to fail, they could have taken down the entire financial system with them. Hence bailing them out was one of the solutions to avoid the systemic risk.

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The U.K. Budget: Challenging Osborne's Claims about Taxes

Those with the broadest shoulders are bearing the greatest burden. George Osborne, chancellor of the exchequer, in his budget speech on July 8. The chancellor’s claim is a difficult one to test. First, we might argue over what he means “burden” and how we should measure it. Second, the budget included a huge number of measures, some of them shifting the burden one-way; others shifting it back (such as changes to working tax credits). This makes it difficult to come up with an overall assessment.

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