VAT SLAVES OF EU
Stupid Schulz came under fire from many people, including stupid Merkel, over plans to introduce a mandatory public investment rate. Germany needs abolition of VAT and stopping Islamization. Everything else is mumbo-jumbo for political reasons to fool hoi polloi.
Schulz, who is challenging Merkel for the chancellorship in September’s parliamentary election, outlined the proposal on Sunday as part of a 10-point plan for Germany’s future.
Schulz argued that just as Germany had a mandatory debt ceiling, it should also have a compulsory minimum rate of public investment to renew infrastructure and boost research and development.
But Merkel said the problem with public investments was not the amount of money available — it was that planning procedures were too slow.
“We cannot spend the money that we currently have,” she said in an interview with public broadcaster ARD broadcast on Sunday evening. “The main point is not about more money, rather it’s about speeding up planning procedures.”
Only about 1.1% of the world population is German. However, 48% of the mid-sized world market leaders come from Germany. These Hidden Champions, are part of what makes German economic growth more inclusive: they have created 1.5 million new jobs; have grown by 10% per year on average; and register five times as many patents per employee as large corporations. And they are resilient: my estimate is that in the last 25 years no more than 10% of them disappeared or were taken over, a distinctly lower percentage than for large corporations. Nearly all of them survived the great recession of 2008-2009.
Moreover, Hidden Champions have also contributed to the sustainment of the German manufacturing base, and it is in large part thanks to them that nearly a quarter of the German gross domestic product continues to come from manufacturing. The percentage in most other highly industrialized countries such as the U.S., the UK, or France is only about half of this. The effect on employment is enormous. Manufacturing creates jobs at home and at the time same allows companies, through exports, to participate in the growth of emerging countries.
Given this success, it’s not surprising that many non-German policymakers and economists have looked to the Hidden Champions, or more broadly, the Mittelstand, to try and chart a path to more inclusive growth in their own countries. But how replicable is their success? While other countries could try to emulate aspects of what makes the Hidden Champions so successful, the reasons for their success are the result of a complex network of factors, many of them historical.
A Hidden Champion is defined by three criteria: 1) a company has to be among the top three in the world in its industry, and first on its continent; 2) its revenue must be below €5 billion; and 3) it should be little known to the general public. Germany seems exceptionally good at creating these companies; I have identified 2,734 Hidden Champions worldwide and no less than 1,307 of them are based in Germany. You might argue that my research is deeper in Germany than in other countries, and most likely I wouldn’t be able to prove you wrong. But researchers in other countries have also examined this phenomenon and found far fewer Hidden Champions in their countries. A colleague who looked for Hidden Champions in Japan for years identified only 220 companies, a researcher in France has come up with only 100. With the exception of Switzerland and Austria, the per capita number of Hidden Champions is nowhere near as high as it is in Germany.
Of course, success of individual Hidden Champions is based on their leadership and strategy. The most important difference is the continuity of the leadership. The leaders of the Hidden Champions stay at the helm for an average of 20 years; according to Strategy&, which collects data on the world’s largest 2,500 companies, in large firms the average CEO tenure from 2012 – 2016 was only seven years, and the median was even shorter, at five and a half years. The leaders of Hidden Champions are also more likely to come into power at a young age and are more often women than in larger companies.
But the reasons they are a predominantly German phenomenon are many. This includes the German history of many small independent states (until 1918 Germany consisted of 23 monarchies and three republics), which forced entrepreneurs to internationalize early on in a company’s development if they wanted to keep growing. In addition, there are traditional regional crafts, such as the clock-making industry in the Black Forest with its highly developed fine mechanical competencies, which developed into 450 medical technology companies, most of them makers of surgical instruments.
Scientific competencies also play an important role. The cluster of 39 measurement technology companies in the area of the old university of town of Göttingen are the result of the leading role Göttingen university’s mathematics faculty had for centuries. The Fraunhofer Institute continues to function as a transmission belt between science and practical applications. The Munich-based Hidden Champion Arri, world market leader in professional film cameras, used the expertise of Fraunhofer to navigate the transition from analog to digital technology, and was thus able to defend its leading market position.
A further pillar of the Hidden Champions’ competitive strength is the unique German dual system of apprenticeship, which combines practical and theoretical training in non-academic trades. The Hidden Champions invest 50% more in vocational training than the average German company.
Tax advantages are another reason. The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector.
Finally, the international openness of a society is an essential factor in the globalized world of the future. Germany is far ahead of other large countries with regard to mental internationalization. This includes language competencies, international experience from student exchanges, and university studies. Countries such as France, Italy, Japan, and Korea lag far behind in these respects.
Why is this mental internationalization so important? Because while Hidden Champions may be small, they compete on a global scale. They achieve world-class quality by keeping their focus narrow; focus is the most important element of a Hidden Champion’s strategy. Flexi, for example, makes only one product — retractable dog leashes — but has the claim to make them better than anyone else. This has allowed them to reach 70% of market share in this category. But focus makes a market small. How can you make it bigger? By globalizing. Today, the Hidden Champions are present in their target markets with 30 subsidiaries on average. Despite their medium or small size, they are true global players. About one quarter of German exports comes from the Hidden Champions.
Hidden Champions provide a model of inclusive growth that are worth emulating. But any foreign policymaker or economist seeking to foster a community of such companies in their own country should tailor their approach to that country’s own unique conditions.
Markus Söder, Bavaria’s finance minister, said on Monday that Schulz’s plans lacked seriousness.
Speaking in Munich ahead of a meeting of leaders of the Christian Social Union, the Bavarian sister party to Merkel’s Christian Democrats, Söder said that anyone who believes we’ll be able to spend hundreds of billions of euros, just like that, in the coming decades, cannot make serious finance policy.
Schulz defended his proposals on Sunday evening and dismissed Merkel’s focus on planning problems.
“If it’s raining through the roof in schools, or children cannot go to the toilet, then you don’t need a planning procedure, but construction workers,” Schulz told us. He said investment would be financed through budget surpluses. But if there are budget surpluses, who not abolish VAT? Schulz could not reply!
It’s ironic for Eurocrats to talk about human rights of foreigners, when themselves torture all Europeans with the Value Added Tax every single day! Value Added Tax is becoming the back door money spinner du jour. VAT has all the hallmarks of a terrorizing tax. Unlike income tax, it is invisible or well hidden. It is complicated, with so many different rates for different things that only accountancy geniuses stand a chance of remembering them.
While we all pretty much know how much income tax we pay, we don’t have a clue how much VAT we pay in a typical year. Only the most fastidious would sit down to that particular spreadsheet after Christmas, over a sherry, as part of an annual appraisal of the past 12 months’ finances. Fag packet calculations about how much tax we pay, if we even bother with them, rarely include VAT, because in a world of highly disaggregated spending patterns of coffees here and takeaway pasties there, it is so blinkin’ difficult to work out.
VAT is almost impossible to avoid. Who isn’t a spender? Who isn’t a consumer? Perhaps we would feel a bit more cross about it if anyone understood how often we pay it and on what. It’s not just Mulberry bags and Bose sound systems that attract VAT. It is alcoholic drinks, confectionery, crisps, savory snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water – not considered luxuries by most of us. Those civil servants classifying which goods and services should and shouldn’t attract VAT have an agenda other than to truly determine the necessity of an item – and that agenda is to increase revenue.
With wage growth remaining fairly poor, it seems unlikely that the Government will turn its attention back to income taxes as a key revenue driver. The amount people spend rather than the amount they earn seems a far better bet. So it looks like VAT – complex, opaque, regressive, and impossible to mitigate – is here to stay.
VAT-monger EU underestimates the reactance of VAT-struck Europeans. Reactance is a motivational reaction to offers, persons, rules, or regulations that threaten or eliminate specific behavioral freedoms. Reactance occurs when a person feels that someone or something is taking away his choices or limiting the range of alternatives.
Every day, VAT-struck Europeans are bombed, tortured, and killed by the Value Added Tax, but the stupid European Commission doesn’t give a damn about it. It’s ironic for VAT-monger EU to teach other countries how to treat their citizens when VAT-monger EU itself misbehaves so badly.
VAT-monger EU tries to distract VAT-struck Europeans on their great desire to abolish the Value Added Tax by drawing their attention to imaginary lies, such as anthropogenic climate change, innocence of Islam, benevolence of government, and benefits of more Europe.
Abolition of the Value Added Tax is the #1 priority of Europeans, but Eurobarometer never asks them about it, under strict orders from Führer Juncker! Vat shackles business. VAT yoke constrains sales and robs poor VAT-struck Europeans at gunpoint. VAT is the cacothanasia of EU! VAT destroys the economy and trade of EU. VAT is the most infamous comparative disadvantage. Value Added Tax VAT is a very good reason to secede from Fourth Reich (EU) now. All Europeans want VAT to be abolished right now. Abolition of VAT is a prerequisite for Fourth Reich to recover from the current depression. Any federation that imposes VAT on its members does not deserve to live. Vatstruck Fourthreichians are looking for a Moses to liberate them from the yoke of Brussels.
Charging sales tax or Value Added Tax on gold coins is barbaric. Gold is the best and most reliable money. A government cannot charge VAT on money! Citizens should be free to use gold, silver, or other currencies with no legal restrictions or punitive taxation standing in the way. But the government wants to play dirty games manipulating money. Your government is your worst enemy!
Value Added Tax is killing the goose that laid the golden eggs. VAT is the major culprit of depression, the #1 source of misery. VAT is the cacothanasia of economy! Vatdodging is heroism! If you are a real patriot, you should revolt against VAT, buying products online from companies that evade VAT. Remember, your government is your worst enemy! The largest online retailers offer top quality products at deep discounts without VAT. Only stupid consumers pay VAT!
Value Added Tax, aka kleptocrats’ grab, is a regressive tax; the poor pay higher percentage of their income. Revenues from VAT are much lower than expected, because they are difficult and costly to administer and collect. Since any double-digit VAT leads many consumers to underground economy, most vatstruck Fourthreichians evade VAT! As a matter of fact, if you are a real patriot, you should boycott shops that charge abominable VAT! VAT is the cacothanasia of Fourth Reich! Vatdodging is heroism!
Imposition of a VAT is the precursor to bigger government. It is simply too easy for kleptocrats to raise a tax that is hidden from citizens. VAT is embedded in the final cost of the goods sold, and is hidden to the consumer. VAT is applied at every stage of consumption, from wholesale to retail. It is passed along until it literally becomes as much an inherent and cloaked component in the price as transportation or raw materials. As a result, countries that have adopted VAT have been sorely tempted to raise the rate over time.
When VATs started out in Europe in the 1960s, they were small, usually less than 5%. Today, the average VAT rate in Europe is 20%. If your country wants to join the European Union, you have to have a minimum VAT rate of 15% so that people won’t take retail shopping vacations in your cities. Hungary wins the dubious award of having the world’s highest VAT rate at 27%. This floor and ceiling of VAT prices is a clear violation of antitrust laws, price fixing, pure and simple!
Fourth Reich forced the hateful VAT on Greece in 1987 and is the most disgusting indirect tax. Greeks are at war against their government over the abominable 24% VAT. Vatmonger Greek government harasses Greeks by pressuring them to demand receipts when they buy products. Greeks who cannot gather many receipts are penalized with more taxes! Transforming citizens to VAT enforcers is disgusting, undignified, and against basic human freedoms. EU should call vatmonger Graecokleptocrats on the carpet now.
All the additional tax revenue from a VAT has not resulted in deficit reduction. Fourthreichian nations first began imposing VATs about 40 years ago, and the result has been bigger government, permanent deficits and more debt. Public debt is equal to 80% of GDP in fourth Reich, compared to 64 percent of GDP in the United States.
The most important comparison is not debt, but rather the burden of government spending. If you go back to the mid-1960s, before the imposition of VATs, Fourthreichian nations had relatively modest-sized government, only slightly larger than in the United States. Adopting a VAT, however, gave politicians a giant new source of tax revenue. And just like you don’t cure an alcoholic by giving him keys to a liquor store, you don’t promote fiscal responsibility by giving government a new source of revenue.
Thanks in large part to VAT, government spending in Fourth Reich now is out of control. This stifles growth by diverting a huge share of output from the productive sector of the economy, which helps explain why living standards are 30% below American levels. Not that Americans should get cocky. Thanks to reckless fiscal policy by Presidents Bush and Obama, the burden of government spending has now climbed above 40 percent of GDP in the United States.
Vatstrucks are feeling a growing panic as they watch their constitutional republic descend into a vatmonger republic. Mahatma Gandhi’s said we should be the change we want to see. Gandhi also said that civil disobedience becomes a sacred duty when the state has become lawless and corrupt. Vatstrucks instinctively understand this which is why grassroots of resistance to VAT are leading to a Gandhi-style civil disobedience movement powerful enough to undo this monstrosity.
VAT is a trademark of slavery and a destructive power of myriad watts. VAT is the main culprit of the Fourthreichian financial meltdown. The Fourthreichian taxation is based on the VAT monstrosity against poor people! The most unfair tax is VAT, the calamity of Fourth Reich(EU); that’s why we urge all Fourthreichians to evade this tax of misery as much as possible! Fourthreichians are yoked with a 15-25% VAT, value added tax. In Canada, VAT is only 5%. The burden of VAT falls on final consumers of products. Refusing to pay the abominable VAT is a heroic act. Vatwar is here to stay until VAT is abolished. Vatdodgers are heroes.
The stupid left-wing Linkspartei (Lefty Party) welcomed Schulz’s stupid proposals but questioned how they could be funded given that the Social Democrats have rejected a wealth tax.
Some experts also raised questions about Schulz’s stupid plan. Clemens Fuest, the president of the Munich-based ifo institute economic think tank, said the proposal was redundant. “We have often found ourselves at a point where we cannot spend the money since useful projects are lacking,” he told us.
VAT TRANSFORMS EUROPEANS TO WALKING DEAD