Day: February 13, 2019

Some taxpayers are getting a bitter surprise this year as their usual annual tax refunds have shrunk — or turned into tax bills — even though President Donald Trump loudly promised them largest tax cut “in American history.”

And with tax season under way, thousands of unhappy taxpayers have been venting their displeasure on Twitter, using hashtags like #GOPTaxscam, and some threatened not to vote for Trump again.

“Lowest refund I have ever had and I am 50 yrs old. No wall and now this tax reform sucks too!!” a woman going by “Speziale-Matheny” wrote from the crucial political swing state of Florida. “Starting to doubt Trump. I voted for him and trusted him too.”

During the year, American wage earners see a portion of each paycheck withheld as income tax, and many then receive a refund the following year if they have overpaid the federal government. That cash boost is eagerly awaited each year, and used to help pay off debt or make large purchases.

But the 2017 tax overhaul — which Republicans promoted as a boon to the middle class — meant many workers paid less in taxes during the year reducing the amount withheld, a change which may have gone unnoticed.

And the reform also cut some popular deductions, sometimes resulting in thinner refunds or even unexpected tax bills.

Early data from the U.S. Internal Revenue Service show that refunds so far this year are 8.4 percent lower than 2018 payouts on average, falling to $1,865 from $2,035.

However, many millions more taxpayers will be filing tax returns by the annual April 15 deadline, meaning this figure could change.

Mark Mazur, assistant Treasury secretary for tax policy under former President Barack Obama, told AFP the negative reaction was “understandable.”

“People focused on the amount of the refund but that’s not the same as their tax liability, the amount of tax they pay for the year,” he said.

Because of lower withholding during the year, some taxpayers have in effect already seen the benefit of the tax cut in their higher paychecks, said Mazur, who is vice president at the Urban Institute.

About five percent of taxpayers — 7.5 million people — will in fact see a tax increase, while about 80 percent should pay less, he said.

‘Angry, disappointed and betrayed’

The IRS on Wednesday said taxpayers who suddenly found they owe taxes could pay their bill in installments and apply for a waiver of penalties normally imposed for failing to pay by the deadline.

“The IRS understands there were many changes that affected people last year, and the new penalty waiver will help taxpayers who inadvertently had too little tax withheld,” IRS Commissioner Chuck Rettig said in a statement.

A key change of the 2017 tax reform is it limited federal deductions for certain state and local taxes like real estate taxes. As a result, many homeowners in states with higher property taxes will owe more to the federal government.

Neil Frankel, a New York accountant, told AFP people were feeling “angry, disappointed and betrayed.”

“I sympathize with them. The new tax law’s withholding tables were incorrect and misleading. A complete shenanigan,” he added.

“Since my clients are mostly professionals, I don’t really hear any screaming,” he said. “However, I do hear long diatribes on hatred for the U.S. government.”

Last year, Treasury Secretary Steven Mnuchin invited taxpayers to use an online calculator to estimate their tax payments, to determine if they should modify their withholding amount.

‘Misleading’ reports

This week, the Treasury Department said media reports on the lower refunds were “misleading.”

“Refunds are consistent with 2017 levels and down slightly from 2018 based on a small, initial sample from only a few days of data,” the department said on Twitter.

But, Mazur said, perception is key: When the administration of former President George W. Bush cut taxes in 2001, it mailed out checks directly.

“Taxpayers remembered that they got that check,” he said.

Under Obama, however, a tax cut showed up as smaller withholdings and fatter checks during each pay cycle.

“Most Americans when they were surveyed didn’t think they got a tax cut from Obama,” he said.
…

The Somali government says it will award exploration licenses to foreign oil companies later this year, despite calls from the opposition to wait until laws and regulations governing the oil sector are in place.

Seismic surveys conducted by two British companies, Soma Oil & Gas and Spectrum Geo, suggest that Somalia has promising oil reserves along the Indian Ocean coast, between the cities of Garad and Kismayo. Total offshore deposits could be as high as 100 billion barrels.

The government says it will accept bids for exploration licenses on November 7, and the winners will be informed immediately. It says production-sharing agreements will be signed on December 9, with the agreements going into effect on January 1, 2020.

“We have presented our wealth and resources to the companies,” Petroleum Minister Abdirashid Mohamed Ahmed told the VOA Somali program Investigative Dossier. “We held a roadshow in London [last week], and we will hold two more in two major cities so that we turn the eyes of the world to contest Somalia.”

But several lawmakers have expressed concern the government is moving too quickly. Last week, the head of the National Resource committee in the Upper House of Parliament accused President Mohamed Abdullahi Mohamed’s government of a “lack of due diligence” and violating the constitution.

Barnaby Pace, an investigator for the NGO Global Witness, which exposes corruption and environmental abuses, says Somalia, after decades of internal conflict, does not have the legal and regulatory framework to handle oil deals and the problems they can cause, such as environmental abuses, corruption, and political fights over revenue.

“There is not a clear consensus about how the oil sector could be managed in Somalia,” he said. “And once Somalia makes deals like the one it’s proposing, it may be locked in for many years and find it difficult to renegotiate or change them to best protect itself.”

Former oil officials speak out

Somalia’s parliament passed a Petroleum Law to govern oil sector in 2008 when the country operated under a transitional charter. But constitutional experts say that law was nullified after a constitution was ratified in 2012.

A proposed new law is now before parliament for debate. The bill says negotiations for oil-related contracts will be the responsibility of the Somali Petroleum Agency, which would not be formed until the law is passed.

Ahmed said government’s timetable for awarding licenses is just “tentative,” though he believes the government can keep to its schedule.

But Somali lawmakers and opposition leaders are worried the government is in a needless rush.

Jamal Kassim Mursal was permanent secretary of the Somali Petroleum Ministry until last month when he resigned.

He says when the government came to power in 2017, the ministry was informed that bids for oil exploration licenses would not be considered until the Petroleum Law was passed and “we are ready with the knowledge and skills.”

Since then, he told VOA, “Nothing has changed — petroleum law is not passed, tax law is not ready, capacity has not changed, institutions have not been built.”

Abdirizak Omar Mohamed is the former petroleum minister who signed the 2013 seismic study agreement with Soma Oil & Gas.

Mohamed said the country needs political consensus and stability before oil drilling. He notes that a resource-sharing agreement between the federal government and Somali federal states has yet to be endorsed by the parliament.

“No company is going to start drilling without agreement with regions,” says Mohamed. “So why rush? It’s not good for the reputation of the country.”

Soma and Spectrum’s advantage

Mursal also objects to an agreement that gives first choice of oil exploration blocks to Soma Oil & Gas, one of the companies that conducted the seismic studies.

According to the agreement, Soma Oil & Gas will choose 12 blocks or 60,000 square kilometers to conduct oil exploration. Among these are two blocks believed to contain large oil reserves near the town of Barawe.

He says the government needs to renegotiate and offer just two blocks instead.

“This is the one that is causing the alarm,” he said. He predicts that if Soma Oil & Gas gets to choose 12 blocks, the company will “flip” some of the blocks to the highest bidder.

In 2015, Soma Oil & Gas was caught up in controversy after allegations of quid pro quo payments to the Somali Ministry of Petroleum. The payments were termed as “capacity building.” The following year, Britain’s Serious Fraud Office closed the case because it could not prove that corruption took place.

Somalia’s current prime minister, Hassan Ali Khaire, was working for Soma Oil & Gas at time. Somali officials say that since taking office, Khaire has “relinquished” his stake in the company, said to be more than 2 million shares.

The other company that conducted seismic surveys, Spectrum, also made payments to the Somali Ministry of Finance, according to Mursal.

Mursal told Investigative Dossier that between 2015 and 2017, Spectrum paid $450,000 every six months to the ministry.

A senior official who previously was involved in the Ministry of Petroleum told VOA that Spectrum paid $1.35 million in all. He said the payment was “consistent,” though, with the advice of the Financial Governance Committee, a body consisting on Somali and donors which gives financial advice to Somalia.

Spectrum has not yet responded to Investigative Dossier requests for an interview.

Current Petroleum Minister Ahmed said the government will do what is best for Somalia, but needs to have a law governing the oil sector in place.

“The parliament has the petroleum law,” he said. “Without it being passed, we can’t touch anything.”

 
…

A new report finds the world’s unemployment rate has dropped to five percent, the lowest level since the global economic crisis in 2008. The International Labor Organization reports the jobs being created, however, are poor quality jobs that keep most of the world’s workers mired in poverty.

Slightly more than 172 million people globally were unemployed in 2018. That is about 2 million less than the previous year. The International Labor Organization expects the global unemployment rate of five percent to remain essentially unchanged over the next few years.

The ILO report — World Employment and Social Outlook: Trends 2019 — finds a majority of the 3.3 billion people employed throughout the world, though, are working under poor conditions that do not guarantee them a decent living.  

ILO Deputy Director-General for Policy, Deborah Greenfield says many people have jobs that do not offer them economic security, lack material well-being and decent work opportunities.

“These jobs tend to be informal and characterized by low pay, insecurity and little or no access to social protection and rights at work. Worldwide, 2 billion workers, or 61 percent, were in informal employment,” she said.

Over the past 30 years, the report finds a great decline in working poverty in middle-income countries. But the situation remains serious in low- and middle-income countries. The report says one-quarter of those employed there do not earn enough to escape extreme or moderate poverty.  

Regionally, the ILO reports only 4.5 percent of Sub-Saharan Africa’s working age population is unemployed, with 60 percent employed. ILO Director of Research, Damian Grimshaw, says these good statistics are deceptive.

“In sub-Saharan Africa we find 18 of the top 20 countries with the highest rates of poverty. And they are also the countries with very, very high informal employment. So, higher than 80 percent in most countries in sub-Saharan Africa, despite having some of the lowest unemployment rates in the world,” he said. 

Grimshaw says the unemployment rate is not a good measure of labor market performance or economic performance in countries with high rates of informality.

ILO experts also highlight the lack of progress in closing the gender gap in labor force participation. They note only 48 percent of women are working, compared to 75 percent of men.

Another worrying issue is high youth unemployment. The ILO says one in five young people under 25 are jobless and have no skills. It warns this compromises their future employment prospects.

 
…

Democrats pushed on Tuesday for a nationwide paid family leave system in the United States, the only developed nation that does not guarantee pay to workers taking time off to care for children or other relatives.

The proposal would establish a national insurance program to provide workers with up to 12 weeks paid leave per year for the birth of a child, adoption or to care for a seriously ill family member.

The lack of paid family leave takes a particular toll on women who tend to care for children and aging relatives, and the proposed Family Act would bring national policy in line with other countries, supporters say.

The United States is one of only five nations that have no guaranteed paid maternity leave, the other four being Lesotho, Liberia, Papua New Guinea and Eswatini, formerly Swaziland, according to the World Policy Analysis Center, a research group at the University of California, Los Angeles.

Family leave legislation has been introduced in the U.S. Congress in previous years but been unsuccessful.

Now, with Democrats controlling the lower House of Representatives and a record 127 women in the House and Senate, it could have a fighting chance, said Democratic Senator Kirsten Gillibrand of New York, a sponsor of the bill.

“Now we have a majority. We have a real shot at getting this passed, and I am so optimistic we can get this done,” said Gillibrand in a statement.

Gillibrand recently announced her intention to seek the Democratic Party’s nomination for president. Guaranteed paid leave exists in a handful of states but not on the national level.

President Donald Trump has voiced support for six weeks of paid leave but his proposal does not cover care for sick family members.

Opponents say paid leave could be too costly for small businesses to shoulder. Supporters of the Family Act say it could be funded through paycheck deductions at an average weekly cost of $1.50 to workers.

“It’s shameful that America has lagged behind for so long on paid maternity leave,” Toni Van Pelt, head of the National Organization for Women, told the Thomson Reuters Foundation. The Center for American Progress, a Washington-based policy institute, estimates more than $20 billion in U.S. wages are lost each year due to workers lacking access to paid family and medical leave.

One in every four U.S. mothers returns to work 10 days after giving birth, according to Paid Leave for the United States, a group promoting family leave.
…

American whiskey makers are feeling the pain after their major overseas markets imposed hefty duties on their liquor in retaliation against President Donald Trump’s tariffs on aluminum imports.

U.S. global whiskey exports, which include rye and bourbons, recorded a nifty 28 percent year-over-year increase in the first six months 2018, the Distilled Spirits Council said on Tuesday.

But once levies from Canada, Mexico, China and the European Union took effect, the collective whiskey exports from 37 U.S. states fell by 8 percent in the period from July to November last year, compared with the same five months in 2017, according to the Washington-based industry trade group.

The tariff-induced drop wiped out the overseas sales gain the industry had enjoyed in the first half of 2018, the group’s data showed.

“Tariffs are starting to have a negative effect on exports,” Christine LoCascio, the group’s senior vice president of international trade, told a press conference. “Many of the small distillers have felt the effect on day one.”

In 2017, American whiskey producers exported $1.1 billion worth of their products. Nearly 60 percent was shipped to the EU, 12 percent to Canada and the rest to other countries, including China.

On the other hand, the distillers fared better at home.

In 2018, American whiskey rang up a 6.6 percent increase in  revenues from a year earlier to $3.6 billion, the group’s data showed.

In the wake of the EU’s imposing 25 percent tariffs last June, U.S. whiskey exports fell 8.7 percent in the following five months, compared with the same period in 2017.

Canada’s 10 percent duties that took effect on July 1 resulted in an 8.3 percent sales decline in that country for American whiskey producers in the July-November period compared with the same period a year earlier, the group said.
…