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Graphic Truth: From baby boom to baby gloom
Women are having fewer children in the US and Canada, where birth rates have been falling since the 1960s. In 2020, Canada’s fertility rate hit an all-time low of 1.4 children per woman. In the US, the national birth rate has fallen by 20% since 2007.
The baby bust is not unique to Canada and the US; the decline is unfolding across the OECD, as women gain increased access to contraception, higher education, and careers, all of which tend to lead to delayed family planning.
High inflation in recent years isn’t helping matters. After all, kids are expensive – from housing to education to health care – which may be enough to deter some couples.
But there is one OECD country where this isn’t the case: Israel. Israeli women have an average of 3.1 children, making Israel the only OECD country where the birth rate is above the replacement level. Experts attribute this to the influence of religion and tradition in the country, as well as social and economic policies that encourage work-family balance.59.5 billion: US oil major Exxon Mobil on Wednesday paid $59.5 billion to acquire Pioneer Natural Resources, a major producer of shale oil in West Texas.
Hard Numbers: Exxon bets on shale, Netflix makes an unchill choice, Google floods the zone, digital tax plans advance
25: Netflix is planning to raise subscription prices again, starting with the US and Canada, as soon as the ongoing US actors strike ends. The precise cost increase isn’t known yet, but it comes after Netflix and other ad-free streamers have already raised their fees by 25% over the past year.
800: Is a flood on the way? As the weather gets more and more extreme, the answer is, increasingly, yes — but where and when? Google Maps has an answer for that: a new prediction service called Flood Hub. In the US and Canada, it will cover 800 river areas inhabited by some 12 million people.
32 billion: The OECD this week released a new draft treaty on global digital taxation that could raise as much as $32 billion annually by enabling governments to tax tech companies in the countries where they operate, rather than just where they are headquartered. It’s unclear whether it will be ratified by enough countries’ legislatures to take effect — but Canada is charging ahead unilaterally with its own digital tax, despite threats from US lawmakers.OECD logo seen on a smartphone and a computer screen.
Canada flies solo on digital services tax
‘Tis the summer for Trudeau vs. Big Tech. You’ll recall that Ottawa plans to make tech giants pay for linking to Canadian news and that the tech firms, in turn, have begun blocking access to news from the country’s outlets on their platforms.
Now, Canada is pressing ahead with a 3% digital services tax on big tech companies. The Liberals plan for the tax to come into effect on January 1, 2024 – after introducing the measure in the 2021 budget and delaying it by a year. The tax is part of an OECD plan to guarantee a 3% tax across jurisdictions that would discourage tech companies from setting up shop in one country over another to avoid paying taxes. It would also mean tech firms couldn’t bully countries into lowering taxes by threatening to leave for somewhere cheaper. But most of the 140+ countries involved, including the US, are not prepared to launch the measure. At least not yet.
There’s lagging support for it in the US Congress, and with Biden facing reelection, ratification of the tax could be politically costly. Washington has asked the OECD to delay implementation, and the organization has pushed the adoption of this measure to 2024. But Canada says it’s not going to wait. Washington is pushing Ottawa to relent, and both the US and Canadian business communities are warning of the risks of a unilateral move, such as trade retaliation from the US and, potentially, other countries – not to mention threats from tech companies themselves.
But Canadian Finance Minister Chyrstia Freeland, unmoved by the warnings, says the tax is in the national interest and that “Canada’s position is unchanged.” Question is, can the US or OECD get her to change her mind before winter?Freed Houthi prisoners stand as they wait to board an International Committee of the Red Cross (ICRC)-chartered plane at Aden Airport, in Aden, Yemen.
Hard Numbers: Yemen prisoner swap, North Korea’s new missile, Germany ditches Russian imports, gender parity in Kiwi cabinet, Juice headed to Jupiter
900: In the biggest prisoner exchange in Yemen since 2020, 900 prisoners are expected to be swapped in the days ahead as part of ongoing talks between Houthi rebels, backed by Iran, and the Saudi-backed government. The confidence-building measure comes amid rising hopes that Yemen's brutal eight-year war might soon come to an end.
1,000: North Korea launched its first intercontinental ballistic missile test in a month, with some reporting that Pyongyang tested an advanced, harder-to-detect missile for the first time. Following a 1,000-kilometer flight (620 miles), the missile landed in waters between the Korean Peninsula and Japan. Japanese authorities on the northern island of Hokkaido urged residents to seek shelter.
91: German imports of Russian goods dropped by 91% during the first year of Russia’s war in Ukraine. Moscow had previously been the country’s 11th-biggest source of imports, but as a result of Western sanctions has since dropped to … 46th place.
10: Jacinda Ardern may have bowed out, but women leaders are getting ahead in New Zealand. For the first time, the country has gender parity in the cabinet. Thanks to a reshuffle by PM Chris Hipkins, there are now 10 women and 10 men in his cabinet.
8: Citing poor weather conditions, the European Space Agency has delayed the launch of a satellite to the planet Jupiter, an ambitious mission that will take eight years. The Jupiter Icy Moons Explorer project, dubbed Juice, aims to explore whether the fifth planet's major moons hold deep bodies of water. The agency will try again in the coming days.
Supporters of opposition party KMT wearing t-shirts with the Taiwan flag at an election rally in Taoyuan.
What We’re Watching: Taiwanese election, Trump's taxes, South African protests, ugly economic forecast
As Taiwan votes, China watches
Taiwanese go to the polls Saturday to vote in the first election since early 2020, when President Tsai Ing-wen won a second term in office right before COVID erupted. This time it’s only a local election, but as with anything political in Taiwan, China is paying close attention. Beijing is bullish on the pro-China KMT party, which is leading the polls in several key races. (Fun fact: the KMT mayoral candidate for the capital, Taipei, is the great-grandson of Generalissimo Chiang Kai-shek, the founder of modern Taiwan.) A good overall result for the KMT would mean two things. First, it would buck historical trends — and China's declining popularity among Taiwanese — if voters sour on the ruling anti-China DPP party just months after China responded with its biggest-ever show of military force to US House Speaker Nancy Pelosi visiting the island. Second, it raises the stakes for the DPP ahead of the presidential election in 2024, when the popular but term-limited Tsai needs a strong candidate for the party to stay in power. Alternatively, if polls are wrong and the DPP does well, expect fire and fury from across the Taiwan Strait.
Trump's tax returns
A long legal battle over Donald Trump’s tax returns has ended. The US Supreme Court on Tuesday upheld an appeals court ruling granting the House Ways and Means Committee access to No. 45’s documents. The Treasury Department is now expected, soon, to give the House committee six years’ worth of Trump's tax documentation. Democratic Rep. Richard Neal of Massachusetts, a committee member, said he and his colleagues will “now conduct the oversight that we’ve sought for the last three and a half years.” Democrats, of course, have been trying to get at Trump’s tax returns in one way or another for much longer than that -- it was back in 2016 when, in a break with tradition, then-candidate Trump refused to publicize them. Still, it might not be all joy for the Dems now. If the Treasury Department doesn't release the documents before Republicans take control of Congress in January, the incoming GOP-run Ways and Means Committee will almost certainly withdraw the congressional request. In that case, Trump's tax returns would remain a secret, despite the high court's ruling.
Anger in South Africa
In South Africa, thousands of public-sector workers have launched a nationwide strike for higher wages in a time of high inflation. The political timing is awkward for President Cyril Ramaphosa. He will seek reelection as leader of the governing party, the African National Congress, next month, and he will try to pack the party leadership with his allies. Supporters of the main rival group within the ANC, the radical economic transformation faction, are spoiling for a fight, and supporters of Ramaphosa’s best-known ANC rival, former President Jacob Zuma, are angry this week because a South African court ruled on Monday that Zuma must return to prison for failure to cooperate with a corruption investigation. (Apparently, none of Ramaphosa’s ANC rivals is impressed that Ramaphosa is in the UK and met King Charles this week.) South Africa’s president will win most of these battles, and he still looks likely to lead the ANC to victory in the 2024 national elections, but the factionalization of the party will remain a chronic problem for the president – and for the nation he leads.
A rough global economic forecast
Those who aren’t economists may assume that if the world can just get through the current spike in inflation, can finally put COVID fully behind us, and can reach a point where the war in Ukraine begins to cool, economic life will return to something like normal. Economists, however, are warning that 2023 is likely to be an ugly year. The Organization for Economic Cooperation and Development forecast on Tuesday that global economic growth will drop to a weak 3.1% for this year to just 2.2% for next year. (That’s down from 5.9% in 2021.) Inflation, according to the OECD’s secretary-general, is now “broad-based and persistent.” The political implications for this problem in the coming year will be felt everywhere. With lasting higher prices for food and fuel in particular, more developing countries, faced with the risk of social unrest, will need financial help, and fewer wealthy countries will have the spare cash and political willingness to help them. In short, 2023 will likely be a bad year to be an incumbent in every region of the world.This comes to you from the Signal newsletter team of GZERO Media. Sign up today.
How will the global corporate tax deal impact tech companies?
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
Will the OECD-brokered global corporate tax deal make a difference?
Well, it should, at least in two years, once it is adopted by the 136 countries that have now agreed to it. Once enforced, a minimum contribution would see approximately $125 billion flowing to public purses where it doesn't today. It would make it harder for countries to be tax havens or to be part of this race to the bottom when it comes to tax rates. It puts a limit on competition between countries but that is still possible. Now, public scrutiny over the corporate sector has intensified over the past years and with a whole host of issues like health care, climate change, and infrastructure begging for better solutions, there is a need for fair taxation that is widely supported, both publicly and now also politically.
Will tech companies finally start paying their fair share?
Well, they would be part of this treaty once it is in place, but in the meantime, there is actually a two-year ban on tax levies. The US negotiated that because if you recall, there were French proposals to tax US tech giants over their European income and profits and those almost led to a trade war between the two allies. So, most likely this OECD tax treaty will go over much more smoothly. Already, the historic agreement by the OECD and G20 countries is a much-needed sign of hope.
Demonstrators take part in a protest against the tax reform of President Ivan Duque's government in Bogota.
Don’t tax the dead: Colombia’s crisis
There's never a great time to impose higher taxes on funeral services — but doing it in the middle of a raging pandemic is an especially bad move. Yet that was one of a number of measures that the Colombian government proposed last week in a controversial new tax bill that has provoked the country's largest and most violent protests in decades.
In the days since, the finance minister has resigned, the tax reform has been pulled, and President Iván Duque has called for fresh dialogue with activists, union leaders, and opposition politicians.
But demonstrations, vandalism, and deadly clashes with police have only intensified. Two dozen people are dead, 40 are missing, and the UN has criticized Colombian police for their heavy-handed response.
How'd we get here? The Colombian government has a common math problem: it spends more money than it raises.
Even before the pandemic, the country's oil exports — a major source of government revenue — were dwindling, and over the past year, the deficit tripled. Now, to pull the country out of its worst economic crisis in decades, it's even more urgent to top up state coffers.
But Colombia has one of the lowest tax hauls of any country in the OECD, and ratings agencies warn that without a tax reform of some kind, a downgrade awaits. That would make it more expensive for Colombia to borrow money abroad, depleting state resources even further.
Duque's proposal would have raised levies on corporations and the rich, while boosting social spending to alleviate poverty. But it also expanded taxes for the middle class and poor, eliminated exemptions for pensions, and added a sales tax to many staple consumer goods and services. Even water would have gotten more expensive. Water!
The math may have been sound but, in a country reeling from the pandemic, the politics were horrific. Over the past year, 3 million more Colombians fell into poverty, raising the poverty rate by 7 points to a staggering 42 percent of the population (source in Spanish.) Thousands of businesses have closed. And the country is now in the throes of a third COVID wave: daily new cases have soared sixfold in the past two months.
Small wonder that when the tax bill was unveiled, three-quarters of Colombians supported a national strike in response.
But these protests are about more than taxes. For several years, a large part of Colombian society has been upset about rising inequality, an epidemic of violence against human rights leaders, rising crime in the cities, and poor healthcare and education.
Just before the COVID crisis started, in late 2019, mass protests over these issues shook Bogotá for days. Today's protests are in part a resurgence of grievances bottled up — and made worse — by the pandemic.
Elections loom. Next year, Colombians will elect a new president. Term limits keep Duque from running again — and with his meager 30 percent approval rating, that's probably just as well. But the social crisis has boosted the fortunes of Senator Gustavo Petro, a leftwing former mayor of Bogotá who got his start in political life as part of the M-19 urban guerrilla movement.
A recent poll showed Petro would get close to 40 percent of the vote if the ballot were held today, an increase of 15 points since last fall (source in Spanish). That a leftwinger should be so popular is a sea change in Colombia, long a center-right country in which decades of war with Marxist-inspired militants — and the recent disaster next door in socialist-led Venezuela — had created a stigma around leftist politics at the national level.
Colombia's crisis is also a broader caution: Many countries are staggering out of the pandemic with weak state finances. The IMF recently found that debt as a percentage of GDP in emerging market economies soared 10 points last year to an average of 65 percent. Meanwhile, poverty and social spending needs have only risen as a result of the economic crisis.
The current upheaval in Colombia is a taste of what could come for many middle-income and poorer countries if they botch the politics of raising revenue.
But no matter how they go about it — not taxing the dead is a smart way to avoid antagonizing the living.
The Graphic Truth: What companies actually pay in taxes
On top of the global debate about enacting a minimum global tax for multinational corporations, there's another growing movement in a host of countries for all firms to pay their fair share in taxes, whether they do business abroad or not. Many US corporations are notorious for getting away with paying little to no federal taxes by taking advantage of multiple loopholes in the tax code — which is true for a lot of them. However, as a whole the average percentage of income US corporations do pay taxes on — their effective tax rate — is in reality not much lower than the legal national rate due to additional taxes levied by some US states and cities — the same as in many other developed economies. We compare the official and the effective corporate tax rates in some nations around the world.