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Weak economy cuts number of South African companies paying tax – The Guardian

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JOHANNESBURG (Reuters) – Nearly half of companies in South Africa had no taxable income in 2017 while a quarter recorded a taxable loss, the South African Revenue service said on Monday, based on its latest 2017/18 data, highlighting the impact of weak economic growth.

The revenue service said based on its 2017 data, 48.3% of companies had taxable income equal to zero, 27.4% reported an assessed loss, and 24.3% had positive taxable income. Companies have up to 12 months from the end of their financial cycles to submit tax returns.

“The decline can largely be attributed to sluggish economic growth, structural challenges in some sectors of the economy, low confidence levels and political uncertainty,” the revenue service said.

“All of these factors play a role in subdued investment activity, resulting in lower profitability for companies.”

In the revenue service’s 2019 Tax Statistics, which measures revenue collection from 2014/15 to 2018/19 fiscal years, revenue collection for the current year ended March reached 1.287 trillion rand ($90.25 billion), short of a target of 1.302 trillion rand.

The collector said companies submitting returns had fallen 36.9% to just over 2 million for the 2018/19 fiscal year, partly due to many being considered “inactive or dormant”, while only 63.4%, or 572,000, of companies expected to submit returns had complied.

Tax revenues have fallen sharply in South Africa since 2015 due to weak economic growth and maladministration.

In addition, nationwide electricity blackouts, forcing mines and small businesses to shut down, have put more pressure on the economy and government finances.

In October, the National Treasury said the budget deficit would jump to 5.9% of gross domestic product by 2020, its highest since 2009/10, and likely reach a 6.5% deficit in 2021, well above government’s target of 4.5%.

($1 = 14.2606 rand)

(Reporting by Mfuneko Toyana. Editing by Jane Merriman)

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Japan Maintains Severe Assessment of Economy Amid Emergency – BNN

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(Bloomberg) — Japan’s government maintained its assessment of the economy in January, using the same terms to describe its state for the seventh straight month, amid a jump in coronavirus numbers that’s triggered a renewed state of emergency.

In its monthly report released Friday, the Cabinet Office described the overall economy in the same grim terms as in December, saying conditions remain severe despite signs of improvement. The government upgraded its view of capital expenditure and housing construction, but lowered its assessment for private consumption and business conditions.

The assessment comes after Prime Minister Yoshihide Suga’s administration this month put more than half the country’s economy under a state of emergency amid a sharp jump in Covid-19 cases to records. Nationwide daily case numbers have been moving around 5,000 in recent days.

Japan Expands Virus Emergency to Cover 60% of Economy (3)

Japanese exports have been rebounding, increasing for the first time in more than two years in December thanks to a recovery in China, but other parts of Japan’s economy continue to lag. Prices haven’t risen for months and the country’s second state of emergency is hitting private consumption and the service sector.

©2021 Bloomberg L.P.

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Biden inherits damaged economy, with signs of hope emerging

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WASHINGTON — President Joe Biden has inherited a badly damaged economy pulverized by the pandemic, with 10 million fewer jobs than a year ago and as many as one in 6 small businesses shut down.

Yet there are also signs of resilience and recovery that suggest the prospect of a rebound, perhaps a robust one, by the second half of his first year in office. Despite the bleakness of the economic landscape, Biden by most accounts faces a less daunting challenge than he confronted as vice-president under Barack Obama more than a decade ago in the depths of the Great Recession.

The hardships inflicted by the pandemic recession have been deep but concentrated in a few extremely hard-hit sectors and harshly unequal. Much of the economy, particularly housing and manufacturing, has held up surprisingly well compared with previous recessions. People fortunate enough to keep their jobs — disproportionately affluent Americans — have bulked up their savings. They could be poised to unleash a spending boom later this year once vaccines have been more broadly distributed.

There are also signs that the job market, for all its deep losses, is enduring less permanent harm than it has in the past and might be set up for a fast hiring recovery.

Still, for now, many signs are dreary: Consumers have retrenched, and months of job gains have turned to losses. New applications for unemployment benefits remain shockingly high 10 months since layoffs first spiked last March. And the human toll of the pandemic recession, from depressingly long food-bank lines to apartment evictions, has yet to show much improvement.

All of which helps explains why Biden saw the need last week to propose another mammoth federal rescue aid package — a $1.9 trillion plan to end what he called “a crisis of deep human suffering.”

Here is a closer look at the economy the 46th president is confronting:

JOBS: MORE LOSSES, LESS SCARRING

The nation has regained more than half the 22 million jobs that were lost to the pandemic in March and April. But hiring has weakened for six straight months. In December, it actually turned negative, with the loss of 140,000 jobs.

Employers may still be cutting jobs because viral cases remain rampant, cold weather is restricting outdoor dining and other activities and consumers are avoiding in-person services, from hotels to airports to retail shops. With the unemployment rate at an elevated 6.7%, a shortage of hiring is prolonging the pain for people out of work.

A major concern for economists is what they call “scarring” in the job market — long-term and permanent job losses that detach people from the job market and diminish their skills and professional connections. This trend tends to make it harder to reabsorb the unemployed into the economy once it recovers.

Here the evidence is mixed: The number of unemployed who say their job losses are permanent — and therefore unlikely to return even when the economy rebounds — has jumped to 3.4 million, more than double the pre-pandemic level. But it appears to be levelling off: The number fell in December and is little changed from August. By comparison, permanent job losses peaked at 6.8 million during the Great Recession in 2008-2009.

And the ranks of those unemployed for 15 weeks or longer has tumbled from more than 8 million in August to 5.5 million last month. Those figures hold out hope that the unemployment rate will fall fairly quickly as growth accelerates.

CONSUMERS PULLING BACK, FOR NOW

The raging pandemic took a fresh toll on the economy over the holiday shopping season, with sales at retail stores falling for three months in a row. Sales at restaurants and bars tumbled 4.5% in December and collapsed by one-fifth for 2020 as a whole.

There are early signs, though, that $600 checks for most Americans that were authorized in last month’s rescue aid package are beginning to boost spending. Economists at Bank of America said that spending on their debit and credit cards jumped 9.7% for the week that ended Jan. 9 compared with a year earlier. That was up from a 2% year-over-year increase before the $600 payments. And the increase was particularly pronounced for those making below $50,000 a year, who spent 22% more, Bank of America said.

HOUSING SIZZLES FOR THOSE WHO CAN AFFORD ONE

Many Americans who have kept their jobs have capitalized on the new work-from-home culture, becoming first time homebuyers or moving into larger digs. Builders broke ground in December on the most new homes since 2006. Home sales are running about 25% above year-ago levels. Four-fifths of construction jobs lost in the pandemic have returned, a much faster rebound than employment overall.

The housing boost has also lifted home prices nationwide, though the gains have been uneven. An analysis by housing website Zillow has found that the number of cities with home prices of at least $1 million surged 17% in the year ending in November. But nearly three-quarters of those gains occurred in subdivisions of nine large coastal metros, such as New York, Los Angeles and San Francisco. That trend has contributed to worsening wealth inequality since the pandemic began.

MANUFACTURING IS SPARED THE WORST, FOR ONCE

Though factory output is still recovering from the initial pandemic-induced shutdowns, for once the nation’s manufacturing workers aren’t among the worst-hit. Manufacturing output rose 0.9% last month, its eighth straight increase. And factories have added jobs for eight months.

In a sign of the industrial economy’s health, the Union Pacific railroad said it shipped 3% more volume in the final three months of the year, compared with a year earlier, its first gain since the pandemic. Even so, both manufacturing output and employment remain below pre-pandemic levels.

Manufacturers have benefited from a shift in spending toward goods — cars, electronics, furniture and the like — and away from travel and entertainment. Some of that pattern will likely reverse should the vaccines succeed in conquering the coronavirus.

A WILLING FEDERAL RESERVE

One more potential tailwind for the Biden economy is a Federal Reserve that has made clear that it plans to keep its benchmark short-term interest rate pegged near zero through at least 2023. Chair Jerome Powell has also said the Fed will keep buying $120 billion in bonds a month until there is “substantial further improvement” in the economy, which most economists expect will last into 2022. The Fed’s bond purchases are intended to keep long-term loan rates low to spur borrowing and spending.

That policy marks a key change for the Fed, which many economists think prematurely raised short-term rates in late 2015 as the economy was still improving and employers adding jobs. That rate increase was motivated by concerns that inflation was poised to accelerate as the unemployment rate fell close to 5%. Yet unemployment eventually fell to 3.5%, with inflation nowhere in sight.

Powell and other Fed officials have stressed that they have learned from that mistake and are now much less concerned about higher inflation and more focused on driving unemployment back down to an ultra-low rate.

Christopher Rugaber, The Associated Press

Source:- 570 News

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Economy

Keystone XL cancellation 'strikes at the core' for Calgary's economic fortunes, experts say – Calgary Herald

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Article content continued

“Our future economic prospects are not tied just to oil and gas, just to the one pipeline,” Tombe said.

“The cancellation of this one project I don’t think will itself carry significant adverse effects for confidence in the economy overall. That confidence is already pretty low because of all the challenges we’ve been facing.”

Calgary Economic Development president and CEO Mary Moran said it’s time to “get on with the diversification strategy.”

“This continuation of not being able to get our product to market, yet having solutions for global climate actions, is really quite disappointing, not just because we’re going to have more office space, but when it comes to people it will result in the shedding of more jobs and we already have the highest unemployment in the country,” Moran said.

“We’ve got to figure out how these people that have chosen to keep Calgary their home, how we get them retrained to go into other industries.”

Moran said Calgary is seeing growth in technology, agriculture and aerospace-related industries. She said Calgary and the province as a whole “need an offence strategy” to move forward following years of economic pain in the energy sector.

“Even if the oil and gas industry comes back, it will not be the mega-job creator,” she said.

“We need many paths for these people if we want to retain them.”

— With files from Madeline Smith

shudes@postmedia.com
Twitter: @SammyHudes

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