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Mexican economy contracts record 17.3% in April – The Guardian

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MEXICO CITY (Reuters) – Mexico’s economy posted a record contraction in April, official data showed on Friday, as the effects of the coronavirus lockdown devastated economic activity, particularly in manufacturing.

Adjusted for seasonal swings, Latin America’s second-biggest economy contracted 17.3% from March, the biggest fall since modern data began being published in early 1993, according to figures put out by national statistics agency INEGI.

The decline, however, was not as sharp as the 19.4% drop forecast by a Reuters poll of economists.

In unadjusted terms, the economy shrank 19.9% in April compared with a year earlier, the figures showed.

A breakdown of the data showed that primary activities such as farming, fishing and mining shrank 6.4% from March. Secondary activities, which include manufacturing, plummeted 25.1% and tertiary activities, which cover the service sector, fell 14.4%.

Auto production almost ground to a halt in April, falling by 98.8% on the year, and the country’s main industry group has forecast output in the sector could drop by nearly a third in 2020.

The government hopes the economy fared slightly better in May, when authorities gradually began to permit sectors such as carmaking, mining and construction to start up again.

(Reporting by Dave Graham; Editing by Steve Orlofsky and Paul Simao)

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US Stock Futures Gain as Market Weighs Virus Cases, Economy – BNN

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(Bloomberg) — U.S. stock index futures rose in Asia on Monday as investors focused on the prospects for an expansion of economic stimulus to help counter the impact of the spreading global pandemic.

September contracts on the S&P 500 rose 0.9% as of 11:12 a.m. in Tokyo, after an advance of 4.1% last week. Futures on the Dow Jones Industrial Average rose 1% and those on the Nasdaq 100 Index added 1.2%. U.S. financial markets were closed on Friday before Independence Day on July 4.

“Asia markets look set for mixed moves going into the fresh week with concerns still centered on the continued Covid-19 spread, all weighed against the continued data optimism,” Jingyi Pan, a market strategist at IG Asia, wrote in a note. “With U.S. states continuing to post record cases into the July 4 weekend and the World Health Organization likewise having reported a one-day high in global infections over the weekend, the battle between the Covid-19 drag and improving economic conditions continues.”

Coronavirus cases in the U.S. increased by almost 56,000 on Sunday, a 2% rise that outpaced the 1.8% average daily increase over the past week, according to Johns Hopkins University.

June employment data came in stronger than forecast on Thursday. Goldman Sachs Group Inc. economists revised down their estimates for the U.S. economy this quarter, but predicted it will be back on track in September after some states imposed fresh restrictions to combat the coronavirus. Congress is set to resume talks on the next stimulus bill later this month.

©2020 Bloomberg L.P.

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The TaxLetter: Tax Planning In A Down Economy – COVID-19 Tax Tips – Tax – Canada – Mondaq News Alerts

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Back in early February, before we all went into lock-down due to
Covid, I wrote about implementing a refreeze in a down economy. Who
knew back then that the economy would continue to drop like it did.
So it made me consider what other tax planning strategies to
consider, in addition to a refreeze, while our economy is still
down (if you haven’t read my February article, consider doing
so).

Triggering losses

I think it would be a safe bet to say that your investments
might have taken a hit in the last few months. So you may want to
consider which of your losers you might want to cut loose. By
triggering the loss in 2020, you can carry it back three years to
offset against any capital gains in previous years, or you can
carry forward the capital loss indefinitely to offset against
future gains. Note: If you are lucky enough to have gains in 2020,
you have to first use the losses against current year gains.

NOTE: Beware of the superficial loss rules when
triggering a loss. If you’re selling on the market to take a
loss, and you buy back an identical investment within 30 days
before or after the sale, the loss will be denied. Although these
rules are designed to counter artificial losses, they could apply
inadvertently – for example if you sell, then change your mind and
buy in again, maybe after the stock has dropped further. The rules
will also apply if your spouse buys back in within the 30-day
period (or a controlled company), but not if a child or parent
reinvests. The rules apply not only to stocks, but to mutual funds
as well. But they only apply if you repurchase an identical asset.
So if you sell Bank A and buy Bank B, you’re OK.

Note 2: When assessing whether you’re in a
loss position, don’t forget that capital gains are calculated
in Canadian dollars – so currency fluctuations can be a key
consideration. If the Canadian dollar has appreciated against the
currency there will tend to be losses.

Crystallizing gains

On the flip side, instead of triggering losses, you may want to
also look at triggering a capital gain. There has been much
speculation about whether the CRA will increase the capital gains
inclusion rate (currently at 50 per cent) in the 2020 Federal
Budget. Before Covid, the concern was due to the political climate
(i.e. the Liberals had a minority government and the NDPs had
campaigned on increasing taxes). The 2020 Budget was delayed with
the onset of Covid; and now the speculation is that perhaps the
government might increase the capital gains inclusion rate as a way
to raise money to fund the various government relief measures
released as a result of Covid. So if you anticipate a liquidity
event in 2020, you may want to consider crystallizing your capital
gain prior to the release of the 2020 Federal Budget, just in case.
And if you are not sure if there will be a liquidity event or not,
you can consider a strategy that would put the pieces in place to
trigger a gain, but still defer that decision until after the
Budget is released (you should reach out to your tax advisor to
discuss possible strategies). As to when the 2020 Federal Budget is
going to be released, your guess is as good as mine. So you should
have these discussions with your tax advisor sooner than later.

Capital Dividend Clean UP

If you hold your investments in a corporation, and are thinking
of triggering losses as discussed above, then the first thing to do
is to first check your corporation’s capital dividend account
(CDA) balance. What is a CDA? Well, as you know, only 50 per cent
of a capital gain is subject to tax. So when your corporation
realizes a capital gain, it only pays tax on 50 per cent of the
gain. The other 50% “tax-free” portion of the capital
gain is added to the corporation’s CDA. A tax-free capital
dividend can then be paid out of the corporation to you, the
shareholder (as long as you are a Canadian resident). However, if
the corporation realizes a capital loss as part of a loss selling
strategy, those losses will grind down the CDA balance and you will
lose the ability to take money out tax-free. So it is very
important to make sure you clear out your CDA by declaring a
taxfree capital dividend to you before you trigger any losses.

And if you don’t have any cash to pay the capital dividend,
the corporation can satisfy the capital dividend with a demand
promissory note so you can always pull that amount out tax-free in
the future.

Income Splitting opportunities

The Tax Act is full of various rules to prevent you from trying
to sprinkle income to lowtax family members (known as income
splitting). The “attribution rules” for example, would
apply where you transfer property or funds to your spouse
(including common law spouse) minor children, minor grandchildren
or minor nieces/nephews (“Family Members”), unless you
fall under certain exceptions. But in down economies, these
exceptions to the attribution rules generally get spotlighted.

One of these exceptions is the prescribed rate loan strategy. As
I have discussed in previous articles, you can avoid the
attribution rules if you, the higher income family member, loan
funds to the low-income Family Members, provided that they pay you
interest at the “prescribed rate” in effect at the time
the loan is made. Moreover, the interest on this loan has to be
paid by no later than January 30 each year. If you miss even one
January 30 deadline, the attribution rules will apply forevermore.
The prescribed rate has been at 2 per cent for the last little
while, but it is going down to 1% on July 1st, 2020 – so the
opportunity to income split through a prescribed loan will become a
lot more attractive.

If you don’t have cash to loan to your Family Member,
consider doing a loan “in kind”. For example, if you have
a securities portfolio in your name, transfer the portfolio to your
low-income spouse and have your spouse issue a demand promissory
note reflecting the prescribed interest rate for an amount equal to
the fair market value of the portfolio at the time of the transfer.
However, this transfer may be subject to capital gains tax by you,
the transferor, as the transfer would have to be made at the
portfolio’s fair market value. But if your portfolio has gone
down in value, then now is time to make that transfer.

NOTE: if you want to loan to any minor Family
Members, you should do so through a family trust, as minors cannot
legally borrow from you.

Defer RRSP Contributions

If your income / salary has gone down this year due to Covid,
you may want to consider deferring any RRSP contributions until
next year, especially if you expect to be in a lower tax bracket
for 2020. So hopefully, when you are back into the top bracket next
year, you can double up your RRSP contributions for 2021.

Originally Published by
The TaxLetter®
June 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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As post-lockdown economy sinks, experts warn U.K. knife crime could rise again

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Every Sunday as the sun sets over her coastal home, Sandi Bogle looks out at the water before lighting a candle for her nephew, Bjorn Brown.

“He was amazing,” she said. “He used to come and spend a lot of time with me and my kids. We used to go on holiday together. He had a whole future ahead of him, and it was just taken away.”

Three years have passed since knife-wielding thugs killed Brown, 23, an aspiring musician. No arrests have been made, police have not speculated about a motive, and his family’s grief remains raw.

Sadly, they’re not alone.

In the time since Bjorn’s killing, Britain’s knife crime crisis has accelerated. More than 45,000 blade-related offenses — the highest number on record — were committed in England and Wales last year, according to official government statistics. Now, as the United Kingdom plans to emerge from lockdown, there are fears of a new surge in fatal stabbings.

Gang rivalries revisited after months of confinement, social media scores that need to be settled, even the normalization of masks — in post-pandemic Britain, there will be no shortage of criminal triggers.

Police shot and killed a knife-wielding man in a hotel in Glasgow, Scotland, after he went on a rampage that left six people, including a police officer, hospitalized on June 27.

Police forensics officers at the scene of a fatal stabbing in Bexley in southeast London on Oct. 13.Dominic Lipinski / AP file

The suspect was identified as a Sudanese immigrant named Badreddin Abadlla Adam, 28.

Adam was staying in the city center hotel, along with about 100 other asylum-seekers, after having been moved there during the pandemic. Authorities say they are investigating.

For experts, however, the most feared consequences of COVID-19 are those not immediately obvious, but the disease’s deeper socioeconomic effects.

John Sunderland, a retired police superintendent, spent two decades confronting the conditions in which violence ferments, and he knows all too well the agony it leaves behind.

“I remember the sound of his family initially singing hymns and then just beginning to wail — an incredibly haunting sound,” he said, recalling the murder of Kodjo Yenga, 16, of West London, whose fatal stabbing in 2007 signaled the start of the city’s knife emergency.

In the years that have followed, the crisis’s racial dimension have come under scrutiny. In 2018, over a third of London’s serious youth violence offenders — and a quarter of the victims — were Black, official statistics revealed.

While that suggests that the city’s Black community (which constitutes 13 percent of London’s population) is disproportionately blighted by youth violence, it’s important to note that 2 in 5 serious youth violence offenders and victims were of white heritage. Likewise, statistical analysis indicates that, outside London, ethnicity and violent crime figures correlate far closer with population proportions.

Experts like Sunderland attribute Britain’s blade attack epidemic to the effects of poverty and a lack of prospects more than race.

The links between social deprivation and knife crime are well documented. In neighborhoods where unemployment is high and economic mobility is low, violent behavior breeds. When funding for local community-minded programs is cut, the spiral of hopelessness and aggression intensifies. That, Sunderland said, is why the financial fallout of the coronavirus pandemic is so concerning.

“So many of society’s natural safety nets for the boys and young men caught up in knife crime have already disappeared in most parts of the country,” he said. “The cost of austerity has always been greatest for those least able to bear it.”

This point was made painfully clear last year, when new local government statistics revealed that three-quarters of London’s most violent boroughs were among the 10 most deprived and that all had higher proportions of child poverty than the city’s average.

From left, Sarah Jones, a member of Parliament, with children who have been affected by knife crime, delivers a letter to British Prime Minister Boris Johnson’s home at 10 Downing Street last month. David Mirzoeff / Press Association via AP file

The data reflected an “appalling side effect” of the government austerity, Mayor Sadiq Khan said, adding that “you can’t cut police officers, public services, preventative measures and ignore the most vulnerable people in our country at the same time as keeping crime low.”

James Alexander, a criminology expert at London Metropolitan University, reached a similar conclusion. Inner-city housing estates are “conveyor belts” of violence, his research indicated, with a constant turnover of cash-strapped youngsters turning to crime. As Britain’s lockdown lifts and the economic aftershocks of COVID-19 are felt, the process is likely to accelerate, he said.

“Going into next year, we’re almost certain to see a rebounding of knife crime and youth violence. … There’ll be more pressure on young people to make money” illegally, he said.

Tackling the surge requires a systemic approach, Alexander said, one that promotes collaboration to heal community breakdown.

“When you talk to the parents, they feel very isolated,” he said. “Instead of going ‘I’m a youth worker, I’ve got the solution,’ [outreach programs] need to be more collaborative. They need to say, ‘I’m a youth worker, let’s help develop the solution together.'”

One program, the so-called violence reduction unit, holds the hopes of many. Pioneered by American epidemiologists in the crime-ridden Chicago of the 1990s, the program addresses street violence through the prism of public health, treating it as a symptom of deprivation and poverty.

Rather than focus simply on hard-power policing and custodial punishment, city authorities started working to improve the prospects of would-be criminals, offering them an alternative to gang membership with job opportunities and education.

Officials in Glasgow adopted a similar strategy. Guided by a simple principle — that violence is preventable, not inevitable — the city’s violence reduction unit worked with schools, health groups and social services to disrupt the root causes of knife crime, giving youngsters a springboard to build better, nonviolent lives. Twelve years after its inception in 2005, Glaswegian homicide rates had fallen by half.

Might London benefit from a similar program? Its mayor thinks so, and last year he launched the city’s own violence reduction unit. “I am leading London’s response to understanding the causes of violent crime and working to stop it spreading,” Khan said.

Anti-knife crime campaigners on Westminster Bridge in central London, calling for action over recent bloodshed in April. Stefan Rousseau / Press Association via AP file

But not everyone is convinced.

“Would it not be better to go to somewhere — maybe Germany — that doesn’t have such a big knife crime or serious youth violence problem and ask: ‘Why do they not have the problem? What can we copy from what they’re doing?'” Alexander asked.

Sunderland, the former police superintendent, has reservations, too. While the violence reduction unit formula is promising, he worries that — having eschewed Glasgow’s rigorously apolitical approach — the program in London is doomed to fail.

“When you have political leadership, the approach becomes partisan [and] short term in its focus, because it’s very difficult to get politicians to look beyond the horizon of the next election,” he said.

For the family of Bjorn Brown, that is disheartening news. Deprived of justice, they seek solace in the hope that, one day, others might be spared their pain.

“We have to keep talking. It doesn’t take just one person to build a child, it takes a village, it takes a community, it takes the country,” said his aunt, Sandi.

“I don’t want my nephew to have died for nothing.”

Source:- NBC News

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