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ADRIAN WHITE: Underground economy is thriving – TheChronicleHerald.ca

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There is no doubt that COVID-19 has changed the way businesses function in Cape Breton. The pandemic has forced many entrepreneurs to reshape operating strategies for financial survival.  

Think of the new safety protocols for restaurants to protect staff and customers from virus transmission. Think sporting events playing out before near-empty stadiums and instead focused heavily on revenues generated from media broadcast of the event.  

There are just too many changes to business practices to list here in this column including the growth of digitization in our economy but I wanted to single out a few examples to illustrate some telling impacts. 

One major impact comes from folks not feeling safe to travel outside the province or eat out in restaurants due to the pandemic. Instead, they are using some of those cash savings to fund home improvement projects right here in the Cape Breton economy. That is a good thing for our community and our workers and it supports the “Shop Local-Buy Local” mantra being promoted by the local business community. 

Demand in the home improvement sector has soared and is so strong that it has led to a shortage of building materials, a rapid rise in material costs and a shortage of skilled labour to take on those home improvement projects.  

Many new contractors have entered the home improvement business in 2020 and many anxious homeowners are in hot pursuit of their services. Sometimes these contractors show up when expected to do a job and sometimes not. This has been a long-standing problem with small contractors in Cape Breton.  

Some contractors present an official written quote including HST for the project leaving a paper trail to follow while other contractors are quite prepared to take cash from the customer thereby avoiding HST. Cash leaves little trail for CRA to follow when it comes to reporting taxable income. 

This practice leads me to shed some light on the underground economy and its impact on our well-being as a province. Statistics Canada defines the underground economy as “consisting of market-based activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature.”  

I use the construction industry as an easy-to-understand example but you can imagine other opportunities for tax avoidance including buying illegal cigarettes, street sold cannabis, cash tips, paying cash for services, Airbnb cash rentals, or offshore bank accounts not being reported to CRA. 

In Nova Scotia, according to Statistics Canada, the underground economy was estimated to be $1.28 billion in 2018. That is near 3 per cent of provincial GDP. This is revenue that escapes government taxation. Nova Scotia’s underground economy as a share of GDP is higher than the national average which is troubling. Taxes on $1.28 billion would go a long way to offset the forecasted 2020 Nova Scotia budget deficit of $853 million due to the pandemic. 

Some of the underground economy is driven by the fact Nova Scotia has the second-highest personal income tax rates in the country. It remains one of three remaining provinces in the country that still practices “bracket creep” on your personal income tax deduction by not adjusting it to CPI on your annual income tax return.  

The higher the taxes the more incentive it provides for individuals and companies to embrace tax avoidance. Alberta has one of the lowest personal income tax rates in Canada and no provincial sales tax. It abandoned “bracket creep” on its residents decades ago. It also has one of the lowest underground economy as a share of GDP rates in the country running at 1.8 percent of provincial GDP.  

British Columbia has the highest ratio at 3.7 percent of GDP. In Canada, the underground economy was valued at a whopping $61 billion in 2018 amounting to 2.7 per cent of national GDP.  

I can only imagine with the increased demand for home improvement projects in Canada due to the pandemic that underground economic activity will likely increase 50 per cent rising close to $90 billion for 2020. 

In Nova Scotia, residential construction accounts for over 25 percent of the estimated underground economy GDP.  The next six largest contributors to the underground economy amount to about 50 per cent of Nova Scotia’s underground economy. They are retail trade, accommodation/food services, finance/insurance/real estate, manufacturing, professional/technical services and health care/social assistance.   

If we want to grow the Nova Scotia economy and thereby increase tax revenues to pay for the services we all expect, we are going to have to rethink the tax burden on individuals and businesses to bring balance and fairness to the tax environment. It is one of the reasons we struggle to recruit doctors to Cape Breton. Above-average taxes in Nova Scotia hinder economic expansion. High taxes will continue to drive the underground economy and tax avoidance until we address them. 

Adrian White is CEO of NNF Inc, Business Consultants. He resides Sydney & Baddeck and can be contacted at awhite889@gmail.com.

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Bloomberg New Economy: The Global Promise of Vaccine Development – Bloomberg

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Pandemic has devastated India's economy and left its children vulnerable to exploitation as cheap labour – CBC.ca

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Ajay Tomar regularly scans the platforms of the New Delhi Railway Station, the busiest in India, running through a checklist in his head. 

The social worker is trained to spot signs of children being trafficked into forced labour. One telltale sign is seeing one or two kids are surrounded by a group of adults, the children isolated. He always glances at their hands to check if they are worn, a clue the child has been working illegally. 

Child labour is illegal in India for anyone under 14 except in special circumstances, such as working for a family business. But it’s a problem that has been exacerbated by the coronavirus pandemic, with indications pointing to a sharp increase in the number of children being exploited as cheap labourers. 

India’s last census, in 2011, showed the country had nearly 8.2 million child labourers between the ages of five and 14, mainly in the country’s poor rural states, such as Bihar and Uttar Pradesh. Children’s rights groups say that number improved significantly this past decade but fear the pandemic will reverse much of that progress.

A 10-year-old boy works inside a lime paste factory in a Mumbai slum in November 2010. Child advocates say that the child labour situation has improved in the past decade but worry that progress will be set back as the pandemic economy forces children back to work. (Danish Siddiqui/Reuters)

India’s swift and severe lockdown to stop the spread of COVID-19, imposed in March with mere hours’ notice, made a desperate situation worse and created “fertile ground” for traffickers, according to Sudarshan Suchi, CEO of Save the Children India. 

It abruptly shut all of the country’s schools and forced migrant labourers out of work, Suchi said, and once the measures started to ease, industry turned to the cheapest labour available to make up the shortfall: children.   

Children who have missed their online classes due to a lack of internet facilities sit on the ground maintain a safe distance as they listen to pre-recorded lessons over loudspeakers in Dandwal village in the western state of Maharashtra. (Prashant Waydande/Reuters)

Schools in many parts of the country remain shut

The country has the second-highest number of COVID-19 cases after the U.S., at 9.6 million, and third-highest number of deaths, at almost 140,000.

Reopening orders vary from state to state, but schools across the country are still closed or operating at a much-reduced capacity, and children in some of India’s poorer communities are not in class because they don’t have access to online learning.  

Children watch online lectures inside a digital mobile education library in Mumbai set up so that children without access to cellphones can follow classes virtually during the pandemic. Schools in many part of India are closed as COVID-19 cases show no sign of slowing down. (Francis Mascarenhas/Reuters)

On the heels of its deadliest month from COVID-19 cases, Delhi’s Deputy Chief Minister Manish Sisodia said schools would remain shut until a vaccine is available. 

In other states, such as Gujarat, classes were set to resume in late November before authorities, spooked by a rise in infections, decided to hold off. 

As a result, Suchi said, his crews have seen a “marked increase” in child labour in urban and rural areas, where children are often pushed into working at garment factories, car repair shops or garbage dumps, where they pick out plastics to earn a few cents.  

“The vulnerability is at its highest right now,” he said. 

Suchi also worries the damage has already been done, since once children from poorer communities leave class for work, it’s much harder for them to return.

WATCH | In pandemic, children have become source of cheap labour in some parts of India:

In India, with a COVID-19 case count second only to the U.S., it’s children who’ve become the cheapest and easiest sources of income for families ravaged by economic fallout. 2:32

Families complicit in child labour

Tomar, who works for the Delhi-based non-governmental organization Prayas, has been seeing more of that vulnerability, too, as families turn to children to help scrape together enough money to survive.

“We find kids here who have come to work … with their fathers and mothers,” Tomar said.

While he was speaking to CBC News, Tomar’s fellow social workers on the railway rescue team were interviewing a preteen boy who tried to run away from the two adults who had forced him into manual labour. One of them was his cousin; the other his brother.

Kids on the platform at the New Delhi Railway Station. Workers from the Prayas Juvenile Aid Centre Society patrol the station on the lookout for children who are being forced to work illegally by adults. (Stephanie Jenzer/CBC)

The boy eventually told the social workers that his relatives forced him to work 14 days in a row at a bicycle-chain repair factory near the New Delhi train station until he got so tired he tried to travel back to his home state of Bihar, hundreds of kilometres away, to see his mother. His captors tailed him to the station, where Tomar’s team noticed the group and intervened. 

Tomar said the fact the boy’s brother was involved in forcing him to work is all too common.

“We find out every day that families are almost all OK [with it],” said Tomar. “We can’t say anything to them. They are vulnerable, marginalized people.” 

Ajay Tomar, a social worker with Prayas, believes during the pandemic, some children he would have normally been able to rescue may be slipping through the cracks. (Stephanie Jenzer/CBC)

Economy contracted 24% during pandemic

Chaman Shagufta, who works as a counsellor with the same organization at a children’s shelter in one of Delhi’s poorest neighbourhoods, knows that all too well. 

She often has to tease the stories out of the children and track inconsistencies before handing their files over to India’s child welfare authorities, who determine if a child should be allowed to return to their family or be sent to a shelter.

Shagufta’s rapid-fire questions, punctuated by terms of endearment, are effective in getting two young boys picked up at the New Delhi Railway Station on their way to Maharashtra from the poverty-plagued state of Bihar to tell part of their story.

“Before the lockdown, we were in school,” said one boy.

Boys at one of the 38 children’s homes and shelters run by Prayas practise drawing and the alphabet. (Stephanie Jenzer/CBC)

He insisted he was 15, but Shagufta was unconvinced, suspecting the boy was closer to 12. 

“It’s very much a probability that they have come for work since schools are locked down and nobody is studying,” she said. 

Many parents know children are being sent off to work, she said, and reason that they may as well “earn something” during the shutdown period. 

It’s a sign of the dire straits families are in in an economy that has contracted 24 per cent between April and June of this year, according to government GDP figures. 

Children near a street corner in central Delhi where they beg for money from drivers stuck in traffic. (Stephanie Jenzer/CBC)

‘Nowhere children’

Children are most at risk under those circumstances, said Amod Kanth, the former Delhi police officer who founded the NGO Prayas. 

“I prefer to call them ‘nowhere children,’ he said. “They are not on the radar. They are not visible. They are not accounted for because they happen to be drifting, traveling, migrating.

“They suffer more compared to others in the pandemic.”

Amod Kanth, a former New Delhi police officer who founded Prayas, says children ‘are not on the radar’ during the pandemic and suffer more as a result. (Stephanie Jenzer/CBC)

In another children’s home operated by Prayas, Poonam waits patiently for a quick visit in the hallway outside the large room where her three eldest children are getting an art lesson from social workers. 

The 30-year old mother of four boys lives in one of Delhi’s poorest slums and told CBC News the eight months since the start of India’s lockdown order were the hardest she’s had to endure. 

“It was tough,” she said. “My children were starving.”

Her husband, an addict, had already left her and she was also caring for her own mother, who has health problems.    

Poonam is a 30-year-old mother of four who works selling vegetables. During the pandemic, she has only been able to earn less than $3 a day. She says she had no choice but to let her children beg for money in order to survive. (Stephanie Jenzer/CBC)

Desperation pushed her to send three of her sons, ages 5, 7 and 11, to beg on the streets outside a local temple and at busy intersections while she ran her vegetable stand, making about 150 rupees (less than $3 Cdn) a day, she said. 

Only, fewer people were out buying vegetables and the struggle to find enough money for the family to eat was crushing.

The boys were spotted begging a month ago and taken in by social workers, who alerted the authorities and started the child welfare committee process to determine whether the three can be sent home. 

They are living temporarily at the Prayas shelter, and Poonam desperately wants to keep it that way. 

“It’s too hard. They will die if they come back to me,” Poonam said, her voice breaking with emotion.

At a home for vulnerable children in northeast Delhi, boys learn handicraft skills. (Stephanie Jenzer/CBC)

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Kuwaitis go to polls as economy poses challenge for new emir – TheChronicleHerald.ca

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By Ahmed Hagagy

KUWAIT (Reuters) – Kuwaitis voted in legislative polls on Saturday with the Gulf state mired in its worst economic crisis in decades, which poses a challenge for the government’s often stormy relationship with a parliament blamed for blocking reforms.

More than 300 candidates, including 29 women, are vying for 50 seats in the Gulf’s oldest and most outspoken assembly with legislative powers. Critics say it has stalled investment and economic and fiscal reform in the cradle-to-grave welfare state.

Campaigning, which took place mostly on social media and local TV channels due to COVID-19 restrictions, has focused on the economy, corruption and demographics in a country where foreigners make up the bulk of the workforce.

“Kuwait needs development. The streets are broken and there is no development and no economy … and coronavirus has affected everything in every way,” said Ibrahim, a government employee, after voting in Kuwait city.

Turnout is expected to be lower than in past elections due to concerns about COVID-19 which, along with low crude prices, has battered state finances in the wealthy oil-producing nation.

A low turnout could strengthen the hand of tribal, Islamist and other candidates who can rally supporters to head to polling centres, analysts said.

“Kuwaiti opposition who boycotted (previous) polls are moving to run and vote, and this could strengthen their presence,” said Kuwaiti political analyst Mohamad al-Dosayri.

Frequent clashes between the cabinet and the assembly have led to successive government reshuffles and dissolutions of parliament. Kuwait’s emir, who has the final say, picks a prime minister who selects a cabinet.

The current government is due to resign after the elections.

Sheikh Nawaf al-Ahmad al-Sabah took the reins as emir in September following the death of his brother.

FACE MASKS AND SANITIZER

Kuwait’s economy, which is worth nearly $140 billion, is facing a deficit of $46 billion this year. A government priority is to overcome legislative gridlock on a bill that would allow Kuwait to tap international debt markets.

Sheikh Nawaf has called for unity to face challenges at home and in a region experiencing heightened tension between Kuwait’s larger neighbours Saudi Arabia and Iran.

Late ruler Sheikh Sabah al-Ahmad broke the hold of opposition groups on parliament in 2012 by using executive powers to amend the voting system, sparking large protests.

Under the old electoral system, voters were allowed to cast ballots for up to four candidates, which the opposition says allowed alliances that partly made up for the absence of political parties, which are officially barred.

The system introduced in 2012 allows votes for only a single candidate, which the opposition says makes alliances difficult.

At al-Waha School in Jahra City, a polling station for men, voters in Arab robes protected themselves with face masks and hand sanitizers before putting their votes into the ballot box.

About 20 female observers watched a male judge checking the identity of women voters at the Bahsira school for girls before they cast their ballots.

Kuwaiti opposition figures have proposed electoral reforms and a pardon for dissidents, many in self-exile.

“There have been some reforms in the judiciary and the Emiri Diwan,” or court, said a Kuwaiti politician who asked not to be named. “We heard echoes of more reforms after elections.”

(Reporting by Ahmed Hagagy in Kuwait; Additional reporting by Stephanie McGehee; Writing by Aziz El Yaakoubi; Editing by William Mallard and David Clarke)

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