Survey findings from the Hurun Research Institute disclosed that a lot of wealthy Chinese are leaving – if they haven’t already left – China for the US, Canada, Australia and Europe. According to Hurun, considered the leading authority when it comes to high net worth individuals in China, rich Chinese are migrating because they want a better quality of life, more education options for their children, cleaner air and food safety.
Obviously, the mainland Chinese are letting their feet do the talking as they take their family and wealth out of the country going by the high number of visa applications to Canada (where a backlog of over 50,000 applications for investment-immigrant visas was reported in the first quarter), bringing with them an estimated wealth of more than $12 billion. And that doesn’t even include Europe, Australia, and the US which emerged as the favored destination for 52 percent of the survey respondents whose net worth average $7 million. The survey also reported that 64 percent of high net worth individuals are itching to leave. Chinese consumers also accounted for 12 percent of all real estate transactions in the international market, with purchase prices ranging at an average of $425,000 and 69 percent of buyers paying in cash.
But aside from the elite, other Chinese who have flown the coop, so to speak, are officials implicated in corruption cases. According to the Chinese Ministry of Public Security, some 150 “economic fugitives” are now living in the US. Reports say that in the last 10 years, only two fugitives were successfully extradited and prosecuted, one of them a bank official who reportedly stole $480 million before he left for the US.
China and the US have no extradition treaty, though, which will make it difficult for the Chinese government to repatriate these officials implicated in corruption cases. In fact, an official of the Chinese Ministry of Security admitted that complex and legal procedures are major hurdles that they face in bringing home the fugitives. According to insiders, exploratory moves are being made to forge an extradition treaty, but US authorities particularly those from the Department of Homeland Security are not warm to the idea because it could invite flak from human rights groups due to allegations that suspects are subjected to torture.
Taxation and fairness
They say the only things certain in this life are death and taxes. But while death can bring eternal rest, the latter can spark everlasting restlessness, a local pundit said. Even in the US, the issue of taxes can trigger anxiety among politicians like what is happening in Alaska with the century-old income tax system having become a fodder for debate.
Advocates of the so-called “FairTax Plan” are calling the old system ridiculous, complex, inequitable and burdensome for working Americans and ultimately damaging to the economy of the US. The proposal seems to be simple: abolish all federal income and payroll based taxes with a simplified, comprehensive approach where only one simple “visible, federal retail sales tax administered by federal sales authorities” will be implemented.
In short, the FairTax says people should only be taxed on what they choose to buy or spend on – whether goods or services – and not based on how much they earn. That way, everyone will stop complaining about the inequality in the current taxation system, the proponents say, pointing put that vendors of all kinds already collect 23 percent on everything they sell, and on services and rentals.
Under the plan, sellers will be required to subject themselves to an audit where they will have to show invoices to show that purchases were bona fide business expenses. Otherwise, they will be compelled to pay the taxes that should have been paid when the purchase was made. The proposal will also make it easier to spot tax cheats and thus make tax evasion a riskier business, advocates stress. Opponents however say it will become even more messy because different revenue agencies other than the IRS will be implementing federal taxation, which is a recipe for disaster.
In the Philippines, Senator Sonny Angara is pushing for a bill that would lower the highest income tax rate to 25 percent in a period of three years. Under the current system, employees earning an annual income of P500,000 and up are subjected to 32 percent income tax – the highest rate – which Sonny says is unfair because a billionaire earning millions of pesos annually is subjected to the same rate slapped on a mid-level company manager earning half a million in a year.
The newbie senator says the proposed lower rates will make the Philippines (which ranks third in ASEAN for highest individual income tax rates) more competitive. Currently, people earning P10,000 a year are taxed five percent, but Anagara says the existing thresholds should be adjusted because they date back to 1977.
The BIR has thumbed down the proposal saying government needs taxes to fund its social service programs for the poor. However, Sonny is convinced that lowering tax rates will increase the purchasing power of the people and will encourage better compliance knowing they will have more money to spend. The reality is, a lot of people are refusing to pay taxes due to the numerous controversies involving the pork barrel, Angara noted. Senators Ralph Recto and Bam Aquino are supportive of Angara’s proposal, with the two also filing bills aimed at adjusting current tax brackets
In any case, Sonny is getting impatient at the seemingly uncooperative attitude of the BIR in working with a panel studying the proposed amendments to the current internal revenue code – saying he will give them until Tuesday next week to comply with the request to submit certain revenue data and documents.
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Email: spybits08@yahoo.com.